Innovation in housing

3rd March 2017

Innovation in housing supply

England is not good at dealing with its housing crisis. The government has lacked imagination when it comes to thinking about how to deal with the under-supply of houses and what stands out about the response that it has been making is an almost complete lack of imagination.

Let’s looks at some of the ideas that could help to bring a quicker solution to the problem of meeting housing needs. Firstly, using imaginative methods to create places to live in.

Manufacturing prefabricated units at considerably less cost than building with bricks on site. Companies are already making living units in factories. These are transported in a nearly-finished form, put in place and services connected and all this can be done at considerably less cost than building houses with bricks and in less than half the time. Using modern materials and up to date methods of fabrication, the production of such units has already started and is proving to be successful.

Several British companies are now offering modular homes for as little as £80,000. Units of this kind are constructed to a high standard of energy efficiency, thus reducing their running costs. Because modern techniques and materials are being used in their manufacture, they can be tailored the needs of the clients. The key factor is that they can transported to site and finished very quickly. Sales of these unites have been good and the house-buying public as shown a real appetite for these innovative units.

Many of the units currently available require land; that can be a problem for many local areas where inner urban building land is in short supply. However, some of these units, designed for urban life, are stackable, making better use of the smaller inner city areas that result from site clearances. In fact, in some cities (where space really is at a premium) units have been placed on top of existing buildings. They are lighter than conventionally built penthouses.

The units are ready to have electricity, drainage and water connected when they arrive on site. Inside one of these units the accommodation is very similar to modern apartments. If you were to walk into one of these units you would think you were in a flat in a newly built apartment block. That is enough to convince many prospective buyers that these are viable living spaces. The size of units ranges from one bedroom to four bedrooms. On the whole, stackable units tend to be low rise projects, if they are stacked on top of each other. Providing three or four tiers of units does not involve much infrastructure.

Pre-fabricated units are a real alternative to traditional buildings and offer a serious solution to the housing crisis. They are affordable in a way that conventional brick-built houses are not. Prices are considerably lower than for the equivalent amount of inside space provided by conventionally constructed houses. Being comparatively light, they can be built on piers allowing car parking space to be provided at ground level. They can thus be erected over existing ground-level car parks. Some units have been designed that employ solar panels to supply electricity. The materials used to make walls and roofs use eco-friendly materials and allow modern materials made from recycled plastics to be used.

Not just cheap

Many of the units currently available offer cheap solutions to meeting urgent housing need. They can also provide homes for other sectors of the housing market, in areas where land is more freely available. If we can provide housing stock for the higher ends of the market (I mean units from £100,000 to £300,00 or more) it would lead to purchasers freeing up existing accommodation. That would also relieve pressure on demand at the lower end of the market. Some of the prefabricated units are clearly intended for the wealthier end of the market; people who can afford the land required and can afford to put services and drainage in place. Providing more units at this end of the market will enable movement to take place that would, I would argue, reduce the pressure on the lower-priced sectors and free up opportunities. Thinking back to what I said before on the renewal of existing urban housing stock, these units could be very useful on sites where redundant properties need to be demolished. Instead of replacing properties with brick-built houses, these prefabricated units could be installed at much less cost and in a fraction of the time. In urban areas, the challenge is not to create new land but rather to use existing land more effectively.

The goal of housing policy should not be to do things on the cheap but to provide housing that is of good quality at prices that people can afford – people who are desperate to have homes but who cannot afford to climb the ladder of conventional housing. When we look at the units being offered by the prefabrication suppliers, we see a lot of architectural and engineering expertise has gone into the design. Much more intelligence has been used by designers in the prefabrication sector than we see in traditional housing building.

So why aren’t we doing it?

The housing crisis is not that difficult to solve. The bigger problem lies in our members of parliament – the people who make the decisions. They are like an old record that got stuck – endlessly repeating the same old formula about building housing with bricks. I have argued before that brick-built houses are not the most viable option for the situation we have in this country. Until our policy-makers move away from that antiquated mantra, we are unlikely to make progress.

We need people with imagination to head up future housing policy. Not just in the palace of Westminster. Local authorities could do a great deal more to provide housing in their areas but this will require both elected members and officers in housing departments to change their long-established, entrenched, attitudes about to how to do things.

The goal is simple: provide quality affordable housing cheaply and quickly. You cannot do that with bricks and mortar.

Learning from failure

The housing acts of the last twenty years are widely regarded as being failures. Successive governments have failed to respond effectively to the growing problem inadequate housing supply. Recent responses by the present government looked very much like knee-jerk reactions that had been poorly thought through.

The housing White Paper of February 2017 achieved one thing: it recognised that the housing market was broken and needs fixing. Little else of worth was contained in it. But then a white paper does what a white paper does; it opens the door to consultation. The white paper realised that there is a need to encourage diversity in the housing market. It said:

Action to help small independent builders enter the market given including through the £3 billion Home Building Fund. Currently around 60% of new homes are built by just 10 companies.

Those ten companies are brick builders and they are part of the problem – not part of the solution. If we want diversification in housing supply we have to break that monopoly. In my view that means providing incentives for non-brick fabricators to do a lot more. If the Home Building Fund is in fact to provide much-needed scope to enabling new methods of construction, then we will be well on the way to dealing with the crisis in the supply of affordable homes.

Another thing that Sajid Javid said the White Paper:

The proportion of people living in the expensive private rented sector has doubled since 2000 and that more than 2.2 million working households with below-average incomes spend a third or more of their disposable income on housing.

If there are more people in the renting sector then we need to find ways of supporting them. I very much doubt that we will see a significant decrease in the rental sector over the next ten years – what ever else happens to housing supply. What would help the rental sector is to provide a much more diverse range of options and an robust increase in the number of apartments that are available to rent. Building high rise apartment blocks in urban areas is one way of increasing supply but it is not the only one. Policy-makers need to be much more imaginative; that means letting go of traditional methods of building construction and focusing more on innovative contemporary techniques.

The government consultation on planning policy and legislation in relation to planning for housing, closes on 2nd May 2017. From the Government website we see that:

Many of the changes involve amendments to the National Planning Policy Framework. The Government intends to publish a revised Framework later this year, which will consolidate the outcome from the previous and current consultations. It will also incorporate changes to reflect changes made to national policy through Written Ministerial Statements since March 2012. These are:

Support for small scale developers, custom and self-builders (28 November 2014), etc.

The statement about support for small scale developers is one of nine topics. It might prove to be one of the most important. Interesting to see the word ‘custom’ in there.

Turning things around

The history of housing legislation – in the past twenty years or so – has been littered with outmoded, poorly thought-through measures that have failed to make an impact on housing supply and that is why we now have the crisis that we see today.

It is not just the reluctance of policy-makers to embrace new methods of construction that leads of failure. It is also their inability to devise new methods of finance. We have known for a very long time that there has been a shortage of traditional mortgage finance. Tackling this issue probably does not lie in reforming banks and building societies; some of it might be but what is more likely is that we have to devise new methods of providing finance to prospective home buyers. We might well have to replace the mortgage with a new way of financing home ownership.

Sajid Javis is an old-school thinker; he is still chanting the mantra of building new houses and his record is clearly stuck in the groove of bricks and mortar.

Two groups of people are at a severe disadvantage in the housing market: the young and old. Young people have not been working long enough to have saved up enough money for a deposit. They are dependent on the ‘bank of mum and dad’ – if they are fortunate enough to be born to relatively well off or wealthy parents. Older people can often find themselves unable to access mortgages because of their age; mortgage providers frequently view retired people as being bad risks when it comes to paying off housing loans.

These two groups stand to gain from the introduction of new methods of construction. Because these units cost a great deal less, they are more affordable and much less capital is required to buy them. If smaller loans are required, existing mortgage providers might be more willing to lend, over a shorter period of repayment. This in itself will not solve the problem. What we need is a totally new approach to financing access to housing – one that is not based on lending large sums of money over twenty five years. We should rely on only the private sector to provide home loans.

Think of it this way – people are financing cars costing between £20,000 and £50,000 without facing the up-hill struggles they experience when trying to finance a home to live in. Cars do not hold their value as much as homes over a period of years. The chance of a car being written off due to an accident is considerably higher than loosing a home due to, say, fire or natural disaster.

Housing is an issue of fundamental importance; many other aspects of our lives are pivoted on having a suitable and satisfactory home. If our country is to become a better place in which to live over the next twenty years or so, we must be able to deal with the housing crisis that we face today.

References

February 2017. YMCA response to housing white paper.

February 2017. The housing white paper.

EconomicsAgeing

The economics of ageing

Over the past few months I have been following the media’s preoccupation with the “baby boomers”. Being over 60,  I am facing up to the challenges of not being in my prime any more. As current policy goes I am in fact only a few years away from retirement age [at the time of writing – see below for original date of publication].  What weighs on my mind however, is that by the time I reach 65 they will have moved the goalposts. I will have to wait till I am am 70 and who knows, by then, they will have probably dismantled the goal posts altogether.

I am most probably part of the work-till-you-drop generation. Retirement is just a passing phase, in the broader historic scheme of things. My grand fathers worked till they dropped and retirement was a luxury afforded only to post-war generations but, as an economic concept, it looks it’s being consigned to the museum of history.

What do we do?  With a labour market that is almost universally geared to people aged between 21 and 31, people in my age group are struggling to find any kind of employment. Despite the government’s blandishments about the need to employ older people, the recruitment industry just does not want to know.

This is why I am building my future around self-employment, where age does not necessarily matter. After 45 years of working life, I consider myself to have a broad range of knowledge, skills and experience. Try telling that to HR consultants. Fortunately I now include in that work profile,  over 15 years experience of running my own micro businesses.

Several things have got me thinking about the future of work.  Notice I use the word work; part of my vision of the future is that employment  is likely to follow retirement  into the graveyard of economic history – at least for a very sizeable segment of the population.

The 21st century is going to experience a sea change in how people earn a living. Large sections of the population are going to have get into self-employment and running their own  businesses, for no other reason than that is the only way they can avoid destitution and poverty. We are enter the age of the “sole trader”. [Current indications are that just under half the UK population of working age is self-employed. According to the Office of National Statistics, ‘Self-employment higher than at any point over past 40 years’, in 2014. ‘ The number of over 65s who are self-employed has more than doubled in the past 5 years to reach nearly half a million’]

We saw the rise of the Entrepreneur in the industrial revolution, the rise of the capitalist and the rise of corporate man in the twentieth century.  All that is waning and the the age of the sole trader is upon us. Company pensions are going to be a thing of the past and indeed several people have said recently that they have given up on the idea of a pension and prefer to invest in more secure containers for their wealth.  It’s an issue that government policy analysts are wrestling with. Western capital has moored itself to the rock of the pension funds, only to find that they have secured themselves to rocks that are beginning to sink to a watery grave, where they will find themselves gathering encrustations alongside the wrecks of “banks” and “building societies”.

In the meantime, my ship of private business is sailing into the new dawn of the twenty first century economy. Those who are aged 55 and over should be thinking about their futures as working men and women. Those futures are largely going to be self-determining.  We are exhorting our children to start paying into pension funds as soon as they start work, planning for a life-time of saving for their retirement.  Don’t.  It’s basing their future on the here and now.  Not a good idea.

I would rather see the nation’s parents exhorting their offspring to go on business courses, so that they have to basic skills to go it alone, if they find themselves bereft of employment  (a not-unlikely scenario, in my view.)
Tax consultants will have to start thinking outside of the box. Post-war society never had it so good because the state could easily collect its revenues from bulk employers: the corporations that could maintain an army of administrators to tax the work force and send the cheques to the treasury. Very cost-efficient. It is not where things will be in the future.

There might well be big corporations for the rest of our life-times but they are likely to be populated with sub-contractors rather than employees.  I am seriously thinking about the amount of time I spend submitting my CVs to companies. My four hours a day of laborious sifting through vacancies could be better spent raising my profile in the market place. So, if you’re the MD of a recruitment agency or a jobs web site, take my advice – plan for the future and re-engineer what you are doing. Your business is likely to find itself resting alongside the wrecks of the pension funds and banks.

The old order is waning. We just need to stand back far enough to see the bigger picture and look for enough head to see the direction in which the world is heading. Listening to a social media guru tonight, I heard her say that she stopped bothering about getting herself listed on job web sites and concentrated on making herself “be found” on the Internet.  Now, people phone her up to ask her to work for them, she claimed.  Much better.  That is where I need to be. recruiters now should be searching for people to hire. if you want a particular type of person, someone with a distinctive profile, you should be out there looking for them.

They [prospective recruiters]  no longer need to apply to you. You need to apply to them. Age is not important.  It’s a complete red-herring (just as is gender.) If you need people with the right skills for the job, go out and find them. As tonight’s speaker said:  NEVER put your real age on a profile, the speaker claimed.  I totally agree and we both understand the reasons why this principle is of prime importance. For me, it mainly to do with identity theft, where date of birth is the key to stealing identity (I know from my years of doing genealogy.)

I have decided not to put my age on my CV and I am busily deleting information that will give a clue to my age. If they are going to judge my application using age as a factor, I don’t want their job, I will just press the next button.

So, what am I going to do that will earn me a living and be consisted with my knowledge, skills and experience? I am going to work (notice the lack of the word job) for companies who can make money from people like me and share the benefits with people who want to work for them. Forget the pension, the PAYE, the office, the set hours of work, the employment contract, the annual leave package. These are legacy already.

Ah!  I can hear some of you whingeing already about the loss of annual leave. Well when you work for yourself you arrange your own holidays. You decide how much holiday you can afford, when you want it and where and how you want to take it.

Wave good bye to the concept of annual leave, conditions of service, benefits (such as the company car), the corporate credit card, health plans and all the other trappings of post-industrial corporate life. If you want something, earn the money and buy it yourself.

I did talk about sole traders  earlier didn’t I? Well, it’s interesting that many of the people who are on the long march into the new economy are working together. Yes they are still sole traders but they seeing the opportunities of working alongside other sole traders in business pods, even in project swarms. Being a sole trader can be lovely and isolating. Until you discover all the other people who are in same situation and suddenly realise that if you all work together,  you can be more than the sum of your parts.

Disheartened?  Frightened? Filled with foreboding?  I’m not. I am excited about the possibilities and the opportunities to show what I can do with my 45 years of experience.

Trevor Locke © 15th December 2010

Published work

Trevor Locke

§ means that I have a copy in my possession.

Books

New Approaches to Crime in the 1990s: Planning responses to crime. 1990. Longman Group (UK) Ltd. 292 pages. ISBN 0-582-05124-X Now out of print

Organised Responses to Urban Drug Problems. Masters Dissertation. November 1990. Leicester Polytechnic Business School. 91 pages.

Local Area Profiles of Crime: neighbourhood crime patterns in context (with Norman Davidson, University of Hull), Chapter 3 in: Crime, Policing and Place: Essays in environmental criminology. Edited by David J Evans et al. 1992. Routledge.

Participation, inclusion, exclusion and netactivism: how the Internet invents new forms of democratic activity, Chapter 13 in Digital Democracy, Discourse and Decision Making in the Information Age, Edited by Barry N. Hague and Brian D. Loader, Routledge, 1999. (Based on a talk that I gave at the Electronic Democracy Conference, Teeside University, 17th to 18th September 1997.)

The Heroes... in golden times. The Story of a band. By Trevor Locke.
The Heroes… in golden times. The Story of a band. By Trevor Locke.

The Heroes… in golden times – the story of a band. July 2015. ArtsIn Publications, Leicester (Copies available by post)

Papers

A Bibliography of intermediate treatment 1968 to 1976, with Jim Thomas, 1977, National Youth Bureau. §

One Night a Week? Aspects of Group Work in Intermediate Treatment, 1981, National Youth Bureau, Leicester. §

The involvement of the voluntary sector in intermediate treatment in Doncaster (Intermediate Treatment Field Reports). 1981. National Youth Bureau §

The involvement of the voluntary sector in intermediate treatment in Southwark. (Intermediate Treatment Field Reports). 1981. National Youth Bureau §

The involvement of the voluntary sector in intermediate treatment in Cambridge  (Intermediate Treatment Field Reports). 1981. National Youth Bureau §

Planning: strategic and practical options in work with young people in trouble, 1981, ITRC Ideas Exchange. §

Strategies for action. 1983. Scottish IT Training Group. §

Report on the design of a monitoring scheme. Presented to the monitoring group of the Durham County Youth Trust, 23rd July 1984. §

Policy and planning in juvenile justice, 1987, NACRO Juvenile Crime Section, London

An analysis of the juvenile justice policies of Durham Social Services Department and Durham Probation Service, April 1987, NACRO, Juvenile Crime Section, London.

Policy and information in juvenile justice systems, with Britton, Hope and Wainman, 1988, Save The Children Fund and NACRO, London.

Juvenile Justice in the 1990s: a strategic approach, 1988, NACRO Juvenile Crime Section, London

Policy development and its implications for practice, 1988, NACRO Juvenile Crime Section, London

Young adult offenders (series of statistical analyses, papers I to V), 1988 to 1989, NACRO Young Offenders Team, London.

Beer and ideas: report on a visit to the Bass brewery at Burton on Trent by the East Midlands Group of the Strategic Planning Society, 1988. NACRO, Juvenile Crime Section. §

Crime in the inner city, report of a one day conference at the University of Birmingham, 1988. NACRO Juveile Crime Section. §

Successful strategy making in public and non-profit making organisations, conference report, 1988. §

Leicester Case Study: the economic impact of crime on a local area, 1989, Leicester Polytechnic Business School (extended student essay)

Strategic planning of responses to crime, alcohol and other drugs, 1989, occasional paper.

Policy developments in juvenile crime and justice, 1990, NACRO Young Adult Offenders Project, London

Planning and co-ordination of responses to drugs, 1990, Occasional paper.

Customer orientation in local government services, 1990, Coventry City Council.

Responding to comments, compliments and complaints (guidelines manual), 1992, Coventry City Council.

Public access to the city council (a report on customer care), 1993, Coventry City Council.

What do you want? Interim report to the Lancashire Probation Service on the needs for specialist resources and partnership development, 1994, Divert Trust, London.

What you can get. Final report to the Lancashire Probation Service on the voluntary sector in Lancashire, 1994, Divert Trust, London.

Final report to the Bedford Pilgrim Housing Association (development of an anti-poverty strategy and report on an area audit) with Ian Chappell, 1995, Divert Trust, London

Teleworking and new technology: current trends and future prospects. Talk given to the British Computer Society, 1995. §

Beyond Joy Riding: the future of car related youth work in Milton Keynes. Final report to the Wheelwright Project from the Centre for Social Action, De Montfort University. 1996. Centre for Social Action and Buckinghamshire County County Council. 34 pages.

Teleworking today and tomorrow, 1998, notes for a talk.

Articles

Policy, management and practice must relate, with Chris Batty, Social Work Today, 31/8/87.

History of Music in Leicester Series

Music and the rise of the Internet – 1990 to 2005 part 2. Arts in Leicester magazine, August 2015.

Music and the rise of the Internet – 1990 to 2005 part1. Arts in Leicester magazine, August 2015

Music of Today – 2005 to 2014. Arts in Leicester magazine, August 2015

Music and technology, Arts in Leicester Magazine, August 2015

Where is live music now? Arts in Leicester magazine, 2014

Self publications

Working with databases: practical information and monitoring schemes, 1995, The Events Service, Leicester §

Policy and information in local crime prevention and justice systems, 1995, The Events Service, Leicester. §

Routes into work: the use of teleworking for rural young people, 1997, Event and Project Services, Leicester. §

Telecentres and teleworking: workshop on telecentres and community networks in action, presented to LEDIS conference The Knowledge Economy, Nottingham, 1997. §

Teleworking

Why Teleworking? A Study and Resource Pack, circa 1996

There are two editions of this loose leaf pack: a general one and a special edition for those in local government. The pack contains a variety of briefing papers, study notes and OHP slides on working at home with computers.

E&PS published a range of Briefing Papers on Teleworking. Paper versions of these papers were available individually or as part of the larger resource pack called Why Teleworking? which was only available by post.

Briefing Paper 5 A place to live: a place to work. Teleworking from home: the implications for planning and house design. 4 pages. 2122 words.

Briefing Paper 6 Teleworking and local government: opportunities and strategies. 4 pages. 1957 words.

Briefing Paper 7 How to develop telecottages and teleworking in rural areas. 6 pages. 2851 words

Briefing Paper 8 Teleworking, telematics and the environment: policies and practices. 4 pages. 1409 words.

Briefing Paper 9 Teleworking and the Probation Service. 4 pages. 1962 words.

Briefing Paper 11 Flexible working practices for business. 4 pages. 1514 words.

Briefing Paper 22 Introduction to teleworking and telecottages. 4 pages. 1802 words

Briefing Paper 23 Teleworking and new technology: current trends and future prospects. 7 pages. 2748 words.

Briefing Paper 24 Teleworking and the Internet.3 pages. 705 words.

Blog articles

Teleworking and the growth of community networks, 2015, on Writer Trevor Locke (on this blog)

See also articles published in this blog.

§ means that I have a copy in my possession.

Housing

20th April 2015

Housing policy

I have had a long interesting in housing – both from a historical perspective and from the point of view of policy.

This month I have published a series of four articles based on the theme of house bricks.  In four parts, this extended feature looks at the humble house brick – past, present and future – and moves on to considering the policy implications relating to house building and the supply of accommodation in England.

All four articles are now published on my magazine Arts in Leicester.  This writing project started when I watched a team of archaeologists investigating a trench at a dig; they discovered several bricks and were able to identify the period that they came from by their size, colour and shape. I thought this would make a suitable piece for a magazine that covers heritage, architecture and history alongside other topics related to the arts.

As I worked on the piece I found myself drawn into more and more areas to do with housing – not just the history of buildings for living but the present and future policies that might come to govern the use and manufacture of materials for building houses. Writing a piece like this was a challenge.  A good writer should be able to write about anything – particularly as both a writer and as a journalist.  I gave myself the challenge:  write about something very mundane and commonplace – the house brick – and see where that takes you. It took me a long way. It took me far beyond bricks into the subject of houses, housing-building and then into housing policy. I was able to draw on my academic experience as a student of town planning and urban policy.  I did not set out to write an academic article;  this was written for the average, lay reader who was interested in the subject, just as I am. I had to do quite a bit of research into a variety of topics within the subject.  Most journalists would do that as a matter of course, particularly when tackling subjects that are not part of their day-to-day work.

I have enjoyed doing this writing project; not only in getting into the subject matter but also in managing the length of the whole thing.  I was well aware, at many points, that I was skimming the surface of some issues but I wanted to avoid getting bogged down in certain topics at the expenses of keeping going the flow of the whole piece. Some experts in this subject would find it frustrating that I have touched on topics that could have been treated much more extensively. But then, this was not written for experts.

As we are now a short time away from the UK’s general election,  housing is a subject that has contemporary resonance.  I have found it interesting reading what the major parties have to say on the subject. Equally of interest has been looking at what the government has been doing – since 2010 – to tackle housing issues and policies. What bears most on my point of view is the future of house building, particularly as builders tackle a raft of issues that are affecting them and will come to affect their practice in the next couple of decades. Chief amongst these issues is climate change and the effect it will have on where people can live – as sea levels rise and as the climate in this country changes. The development of technologies is providing new ways of manufacturing building materials. The traditional clay house brick has been the standard for centuries but the demands of the present-day environment are pushing manufacturers to look for new materials. A crucial issue is the increasing use of plastic and the volume that it takes up in land-fill sites; I was pleased to find that work is under way to find uses for waste plastic in the production of building materials.

A series of recent television programmes has highlighted a trend towards innovative building construction. The growing interest in self-build is stimulating, as people become more concerned about having the types of homes that reflect their personal needs and aspirations. As I say in my article, English house builders are not noted for their ability to innovate or to think outside of the box. For them the box remains de rigueur. House builders and designers should, in my view, be more open to change, innovation and experimentation.

These are all things I have been writing about in my article which you can read on Arts in Leicester magazine.

The four articles are:

Part 1 – Bricks and mortar as the basis of housing

Part 2 – Housing, employment and transport: why we need joined-up policies

Part 3 – Providing better housing stock

Part 4 – The future of housing

Read my new book Housing: Approaches to Policy

Why you should plan your business

“Fail to plan = plan to fail”

Why business starts need good planning.

You have a great idea for a new business. You think it could really work. You can  see where the market is and who the customers will be.

You start the ball rolling.

Stop. You have forgotten something – planning. The failure rate for new business starts ups is really high. My guess is that the reason for this is that people launch into it without thinking. More specifically, without planning. Entrepreneurs like to following inspiration – they do not always go with the perspiration.

Once you get into the cut and thrust of day-to-day business operations you won’t have time to think and plan. You will always say “I can’t top to do a business plan. I’d too busy”. I know how you feel.

Most people who start businesses these days fail to allow time to plan the business properly. They do not see the need for this. When things get tough – as they always do – there is no plan B, there is no contingency. This is where the whole enterprise is it risk of failing.

All businesses – whether corporate or sole trader – need to have a business plan. Both the text about goals, missions and markets and also the spreadsheets that predict turnover, income, expenditure and the bottom line for at least the year ahead.

This is not an academic exercise. You will need a business plan to open a band account. You should use your plan to spot where the stress points will be in your monthly forecasts – enabling you to plan ahead and avoid financial problems.

I set up a new social enterprise company and after our first six months of trading we are solvent, we made a small profit and we are really looking forward to the next six months.

 

The economics of local live music

The economics of local live music

Published: 2010

It’s very difficult to run a live music venue and since the start of the credit crunch, hundreds have closed.

Making a profit from live music is, at the small scale end of the market very difficult. At the top end  of the market, companies are making huge profits from live music. In fact, the overall value of ticket sales for live music has overtaken that for the sale of recorded music (for the first time ever.)

It is the ticket buying public that funds live music venues. It is what fans pay at the door that keeps these small venues open. Its is often thought that small venues make their money from bar sales. This is not the case. In most venues, the bar sales budget is kept separate from the operation of the music side.

The music side of the venue has to pay for sound engineers wages, entertainment licensing, performing rights fees, publicity and promotion, cleaning, repairs, electricity, business rates, insurance, door staff and all the work of booking in bands to play at the venue.

In the bar side of things, they have to pay for drinks stocks (often in too small quantities to be able to offer good prices), licensing, health and safety, bar staff wages and cellerage costs.

If the venue makes a profit at all, it has to plough some of this back into the business to fund surpluses at the bank.  Venues go through good times and bad times and its in the bad times that good operating reserves are needed, particularly in these times when overdrafts are available than they used to be.

Demand for live music tickets can be very variable; it can for example be affected by the weather. A long spell or wet or very cold weather can affect ticket sales. The public can be very volatile in their consumption of leisure; people that used to enjoy going out to see a band might now decide to buy a video or CD to watch or listen to at home. In the local area, attendance will depend on the supply of bands that people want to go and see. If the local area has a constant supply of new bands, this will fuel ticket demand. Once a crowd has heard all the bands in its local area, their interest in seeing them regularly might wane. We might also argue that the musical and artistic quality of local bands and artists is a factor driving demand. Where there are high quality bands and acts, people will feel motivated to go out and pay to see them. Even if the venues are not of a high standard, people will put up with this, to see they bands they want to support. However, poor standard venues will see people coming down for one or two gigs but no wanting to get back there regularly over a period of time, if they facilities are dismal.

The public is getting used to increasing standards in the leisure industry, in bars, restaurants, cinemas, shops, cafes, theatres and clubs. Big companies have invested a great deal of money in making these venues attractive. They want to give customers a really good experience when they go out to spend their income on leisure. Sadly the small live music venues can compete with this. the public are getting used to clean, well lit, well decorated venues that are fitted out attractively and staffed by people who are properly trained.

Perhaps this is why they feel so let down when they go to small live venues that are grubby, dimly lit, staffed by untrained students who have to work for a pittance and offer poor value for money. Our small live venues are well below the standards we are used to in the rest of the leisure industry.

Why is this?  Other leisure venues tend to be run by large national chains, big companies that have money to invest in their outlets.  Pubs and bars tend to change hands quite frequently and at eash change of owner, they tend to get revamped and modernised. By comparison, small live music venues tend to be privately owned and do not change hands that often. Most of them operate on a shoe-string and have insufficient turnover to be able to invest in refits and upgrades to their facilities.

One other factor can affect ticket sales at the permanent live music venues.  This is the supply of free music gigs in the local area. Pubs that have falling takings, particularly mid-week, often start to put on bands, knowing that this will bring people into the pub. Bands can fill an empty pub, if only on one mid week date. they don’t charge on the door because this would put off the small number of regulars who do venue out on that night. But the down side of all this free music is that the bands don’t get paid either. The more bands that go and play for free in pubs, just to get a performance opportunity, the less ticket revenue goes into the live music venues. Why pay £5 to see a band at a venue when you can see them for free at a pub the week after?

Free gigs offer some bands the chance to play in a new venue, perhaps to some new people who otherwise would not hear them and in some circumstances they might think this worth the odd free gig now and again.  But if there is a systematic programme of free gigs, going on regularly, with bands who also play in ticketed venues, everyone looses. There is nothing wrong with a few bands putting on a charity funding raising event where they all play for free. But if they are out playing free entry gigs week after week, that serves to lessen the demand for tickets at the venues. It undermines the venues and the bands that could otherwise make a little money out of ticket sales.

Its all about seeing the bigger picture. Permanent live music venues play a key role in live music; they are hard to keep going and they depend on tick sales.  If a live music venue were to say “we will stop hiring bands to play here that play free gigs in our local pubs”, it would be harsh but it would also be realistic. If the permanent live music venues were all to close down, then bands would have no where else to play other than free gigs in local pubs. I think that would be a great loss to the quality of live music in a town.