Amazon has had a huge impact on Seattle in the quarter century since it set up its base in the city. In jobs, buildings and local taxes, it has added an estimated $38bn in net wealth between 2010 and 2016. That is hardly surprising. It has grown into the fourth-largest company in the world, measured by market value, and may soon be the biggest. Now, it is looking for a home for its new HQ. That will be a lucrative prize it will bring with it 50,000 jobs on an average salary of $100,000, and the spin-offs for the rest of the local economy will add a lot on top of that. The competition for that prize is a purely US one, but British cities should pay close attention.
In this country, London would easily win such a contest. Indeed, Amazon has already opened a new 600,000 square feet base in Shoreditch, while Google is spending £1bn on a headquarters in King's Cross. That is one reason why the capital has emerged as the wealthiest region in Europe, and why its output per worker is almost twice is high as its closest rival in Britain (Manchester). A few other cities such as Cambridge and Bristol are carving out similar spaces for themselves. But we need to spread jobs and wealth more evenly.
The worst way of trying to do that is with subsidies or even worse by punishing London. Over decades, we have shovelled money at the regions to try and persuade companies to locate there. The Scottish government, and to a lesser extent the Welsh Assembly, is still trying that only last week Nicola Sturgeon optimistically outlined plans for a Scottish state-run investment bank to make loans to industry. At the same time, we have restricted the capital's expansion by rigorously enforcing the green belt, as if limiting its size would encourage businesses to move elsewhere. The trouble is, none of that has worked very well, and state-backed investments have been the most dismal of all. In reality, the best policy for our traditional cities would be to look at the Amazon list of demands for its HQ, and try to meet as many of the criteria a possible.
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First, make sure there are good transport links to an international airport. A busy executive should be able to get to the office in no more than 45 minutes, which is the transit time Amazon is demanding for the US. Make sure the airport has connections across Europe, and you can quickly transfer to the rest of the world.
Next, make sure there are cycle lanes and pedestrian zones to improve quality of life. Put in plenty of public spaces, green parks, and make sure there are cultural centres that can attract world-class orchestras and theatre companies. No one wants to live in a boring place. And build links with universities to make sure there is enough talent on its American list, Amazon not only wants to be sure it can recruit enough of the right sort of workers, but that it can do so without overwhelming the local job market. At the same time make sure that there is super-fast broadband if you are going to subsidise one thing, make it that.
Finally, free up land so that firms can build their own offices the tech giants in particular like to create their own purposely designed campuses, and they won't be happy if all they are offered is a tarted-up 1960s office block.
British cities that tick most of the boxes on Amazon's check-list won't land an Amazon HQ. But they will attract plenty of smaller but fast-growing business, and they might well be in the running for one of the tech unicorns. If Glasgow, Leeds, Hull or Plymouth could move closer to the standards of the leading cities in the UK it would have a huge impact on the country's wealth. Working on that list would be best way to make it happen.
Who's getting what
Glynis Breakwell, vice-chancellor of the University of Bath, receives a salary of £451,000 the highest for the job in the country and had almost £19,000 in living expenses, including an £8,000 laundry bill, paid for by her university this year. The university also cover her utility bills and council tax.
The chief executive of industrial software developer Aveva, James Kidd, will get a £1.5m cash bonus for agreeing a merger with French firm Schneider Electric's software business, following two failed attempts. David Ward, the finance director, will get £850,000, and ten other senior executives will share £2.52m. Standard Life Aberdeen, the firm's largest shareholder, said it was concerned about the payouts.
Richard Smith, the chief executive of credit-scoring firm Equifax, earned almost $15m last year. Smith was paid a salary of $1.45m in 2016 along with $7,323,095 in stock awards. The rest came primarily from bonuses and pension-related benefits. Equifax revealed last week that it has suffered a huge data breach (see page 8).
The chief executive of Apple, Tim Cook, earned $8.75m in salary and bonuses last year, 15% lower than his salary the previous year. He also received $145m in vested shares. This made Cook the best-paid boss of a publicly traded US company last year, ahead of Netflix's Reed Hastings the only other CEO to top $100m.
Nice work if you can get it
Met Office forecasters are splitting a share of a £1m bonus for making more accurate weather forecasts, according to figures revealed under a Freedom of Information request. The bonus, amounting to £1,017,013, is the largest since the government-backed Met Office was formed 163 years ago, and is awarded when staff members hit "forecasting accuracy" targets set by government and the Public Weather Service Customer Group (PWSCG). The bonus is equivalent to each full-time staffer receiving an extra £330 to their annual pay packet, and comes after two successive years of strikes from staff over frozen pay and capped salary increases. A total of £4.8m was set aside to pay performance bonuses to staff (including board members).
Matthew Lynn is a columnist for Bloomberg, and writes weekly commentary syndicated in papers such as the Daily Telegraph, Die Welt, the Sydney Morning Herald, the South China Morning Post and the Miami Herald. He is also an associate editor of Spectator Business, and a regular contributor to The Spectator. Before that, he worked for the business section of the Sunday Times for ten years.
He has written books on finance and financial topics, including Bust: Greece, The Euro and The Sovereign Debt Crisis and The Long Depression: The Slump of 2008 to 2031. Matthew is also the author of the Death Force series of military thrillers and the founder of Lume Books, an independent publisher.
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