Can a handful of brave start-ups help reverse the trend? Emma De Vita reports. The giant pair of liver bird statues sit atop the Liver Building on Liverpool's pier head. Local lore has it that they watch over the city's fortunes, but it seems they've let their guard slip - Liverpool has been one of the UK cities worst hit by recession. A recent Work Foundation study put it in the top 10 UK locations where it's hardest to find a job and research by the Prince's Trust found that more young people in Liverpool grow up in jobless households than almost anywhere in the UK: one in three don't have working parents.
It's damning stuff, but if you look at the liver birds closely, you'll notice they're carrying sprigs of broom - and there are some causes for optimism. Last month came news that both unemployment and the number of insolvencies are falling in the city. Liverpool One, a glitzy ú1bn shopping development, was launched in 2008 and with the opening up of the pier head, liners such as the Queen Mary 2 regularly spew well-heeled guests into Liverpool, all needing watering and relief from quoits.
There are tender shoots of recovery to be found in Merseyside, planted by those plucky entrepreneurs who have dared to start a business during the worst economic conditions since the second world war. One such is Mustafa Ben-Yusef, a 49-year-old engineer, originally from Libya, who now finds himself spending most of his waking hours in the down-at-heel Liverpool suburb of St Helens. St Helens is a microcosm of what's happened in the north-west over the past few decades. Pilkington's, the glass-maker, once employed tens of thousands of locals in its factories there - now it's Japanese-owned and down to 1,045 staff. It's a place of derelict brick warehouses and terraced housing. Famous for its pies, even local legend Pimbletts bakery closed in December 2008, a victim of the credit crunch. The largest local employer is the council and anyone who makes it to university quickly leaves.
Ben-Yusef's new venture is on a trading estate, housed in a nondescript warehouse, next door to the job centre. The contrast between grey reality and the fantasy housed inside could not be greater, for this is the home of Darkstar Laser - a laser tag arena that promises to transport you to a futuristic planet, with home-made pizza to keep you fuelled up. It costs ú9 for two games in The Ultimate Battleground and business has been ticking over nicely since Ben-Yusef opened the airlock in September 2009. But it wasn't an easy journey, as the bags under Ben-Yusef's eyes testify. 'When we were buying the equipment, we were at the peak of the troubles last year and, every corner you turned, banks were cutting back. It was absolutely horrific,' he grimaces.
He started his career in the UK as a software engineer 20 years ago, working in industrial automation. He helped automate car plants up and down the country for Nissan, Toyota, Honda and Jaguar, but switched to commercial property investment in the mid-90s when it became clear that manufacturing in the UK was losing out to China. In 2004, he helped his wife start up an indoor playcentre in St Helens called Rumble Rumble, before hitting on the idea of bringing laser tag into the 21st century.
He trialled the idea but left implementation until Gordon Brown introduced the empty property rates tax in April 2008, prompting Ben-Yusef to reconsider the potential of laser tag for the once derelict building that now houses it. 'It was September 2008 when we made the decision to go ahead, just as Lehman Brothers went bust and all the troubles in the financial market began,' he says, eyes crinkling in laughter. 'It did make me stop and think: is this the right thing to do? But I was convinced it was - there are things people will do regardless of recession, and this is not a high-cost item. You still have to live, despite all the doom and gloom.'
So Ben-Yusef threw caution to the wind, relying on Mersey-siders' ability to enjoy themselves to make his venture fly. He used his property company MBY to fund the ú200,000 refurbishment of the building, securing an initial agreement with the Co-operative Bank just before the effects of the credit crisis kicked in. With work on the building underway, Ben-Yusef turned his attention to sourcing the state-of-the-art laser equipment, going as far afield as the US and Australia - but it was a British company, DarkLight Developments that won out in the end.
The aim of laser tag is to hit your rivals with a harmless laser beam as often as you can. Each strike hits the leather pack gamers wear, which transmits the information back to the control room. The arena extends over three floors - dark and smoky so the red beams can be seen. Grates between floors ensure that hiding from your opponents is tricky - the aim is to be on the move constantly.
Quality comes at a price - ú80,000 to be exact, and funding was non-existent. 'In previous years, you would just go in and get HP [credit], but this was April 2009,' he explains, 'and I had brokers all over and I just could not do it. It was just horrific.' With the aid of his Chamber of Commerce, Ben-Yusef ending up applying for - and getting - a ú50,000 loan from the Merseyside Special Investment Fund, a public initiative to help start-ups. He had to agree to a 12.5% interest rate, something he found 'absolutely scandalous', but he couldn't find a way around it. 'It is government money invested in a company that at the time was creating 25 jobs; taking these people off the dole, generating VAT on everything we sell,' he vents. 'And then you are kicked where it hurts.'
Did he ever have second thoughts? 'No. I'm always a believer that there is a way around every problem. Obviously, it won't come easy - you have to look for it and that's exactly what we had to do.' It cost Ben-Yusef a total of ú1.5m to get the business from empty, leaking warehouse to a laser tag hexagonal arena, replete with futuristic kit and impressive murals painted by an ex-Disney artist.
He won't be drawn on the exact numbers, but says Darkstar Laser turns a profit of tens of thousands on a turnover of hundreds of thousands and is hitting the targets of his five-year business plan. He's already been approached by several other entrepreneurs about franchising his idea and customers come from as far as Germany and Australia for the experience. Around 2,000 people pass through the arena every week, much of it repeat business from local authorities, colleges and the local housing associations.
There are 18 full and part-time staff at Darkstar Laser, from the cleaner to the game marshals, but it wasn't easy finding the right people. 'The biggest problem was laziness', says Ben-Yusef, shaking his head - he himself has taken only four days off in the past 18 months. 'They just don't want to work and, unfortunately, I'm talking about the young - people in their twenties. It's unbelievable. It's a really big struggle to find quality; you want people with a good attitude, who are punctual, reliable, pleasant and who have a good customer service manner. But it is very, very difficult.'
Ben-Yusef blames the benefits systems: 'They don't want to work because they are getting it easy.' He says people come straight from the job centre next door, drop in their CV to say they've applied, and then baulk at the idea of working 40 hours a week for ú6 a hour because they'd lose out on benefit. 'It's not the job centre's problem, it's the people's problem - the lazy ones; some of whom come from two or three generations who haven't had a job.'
St Helens has an unemployment rate of 4.3%, below the national average. Ben-Yusef isn't the only person to dip a toe in its entrepreneurial waters. Last November, a husband and wife team started up Strawberry Buses, a coach company operating between St Helens and two local towns. And where one pie shop closes, another opens: last June, two former Pimblett bakers teamed up with local businesspeople to sell their own steak and gravy and meat and potato pies, branding them 'Pimmies pies', after the 87-year-old original.
Ben-Yusef recognises these as hopeful signs. He says St Helens is 'definitely hurting', though he remains an optimist. 'I started Darkstar in the deepest recession and it is profitable, so if I go by my own example, then yes, there are green shoots.'
Fifteen miles away is The Shipping Forecast, a bar and live band venue on Slater Street, a cobbled road in central Liverpool that until a few years ago was a collection of ropey student drinking holes and The Jacaranda, the pub opened by Allan Williams, the Beatles' first manager, where fans still come to pay homage.
A few minutes' walk away is the grand empty building of Liverpool's once famed department store, Lewis's, which closed its doors in May. For many locals, its closure marked the end of an era. Quotes have been stencilled onto the store's windows. 'Lewis's ... if you got a job there, it was a job for life, it was a job but it was a family ... and you were proud to say I worked in Lewis's', reads one.
But Lewis's days are over. The old gent has been usurped by a brash young kid, in the form of Liverpool One, a glass and chrome shopping centre on the pierside, with 1.65m sq ft of shops. It has soaked up many of the high street shops, including John Lewis and is the kind of place you could imagine local WAGs such as Coleen Rooney, Alex Curran and Abbey Clancy tottering around, buying their St Tropez Tan essentials.
But you couldn't picture them hanging out at The Shipping Forecast - something co-owner Lewis Boardman would probably be glad about. All brown sofas and exposed brick, the bar opened in May 2009 and hosts regular band and DJ nights. The self-styled 'alehouse and eatery' also serves sandwiches at ú4.45 a pop - its target market is resolutely middle-class and creative. Boardman isn't feeling well and it's fair to say the 28-year-old looks a little wan. How much his pallor is down to a decade's-worth of hard partying in the name of business is anyone's guess, but he's dragged himself out of his sickbed to explain why he decided to plough his savings into starting a business in the middle of a recession.
He says in his lilting Liverpudlian accent that having his own venue was the culmination of his ambition. He'd studied for a year at the Liverpool Institute for Performing Arts before starting work for local promoter Richard McGinnis, now his business partner. Boardman preoccupied himself with deejaying, promoting and putting on parties for nine years before they decided to take the next logical step - owning and running their own venue.
This was in 2008 and the pair had already considered numerous venues before McGinnis took a call in September 2009 from 580, the people behind London venue The Lock Tavern. 'They just said, "we're looking at Liverpool and we believe you guys are the guys to work with",' remembers Boardman. 'It was almost too good to be true. These were the people we wanted to copy - we wanted to take what they had already done and bring it here.' What was their proposition? 'They said they wanted to come to Liverpool, but they'd heard some horror stories about it.
'They were scared about coming into the city. They thought it might be a bit - in their own words - like the wild west, but being from Liverpool, we know how great the people and the parties can be.' A joint venture was born, with 580 providing half of the investment and Boardman and McGinnis the other half, raised through the parties they had been putting on at a club up the road. It was a huge leap of faith - 'Christmas was cancelled,' Boardman admits.
Boardman says he was nervous about starting the business in the middle of a recession, but not enough to put him off realising a lifelong dream. 'I knew that there was a gap in the market and that we could do something good for the city and I believed 100% that it would work.' He wasn't oblivious to the effects the downturn was having on the local community. 'A lot of my family are in the building trade and there was nothing happening in the city for a while, so that was a bit of a worry,' he admits. 'A lot of the people around us were getting hit, but there is a lot more work in Liverpool now and it is getting better and better. I think Liverpool as a whole is turning a corner.'
Boardman says the business turns a profit, but he won't say how much. He is confident enough in the future of the venue to be already planning the opening up of the first floor. How does he feel about the current economic climate? 'Well, I'm always optimistic,' he laughs. 'In terms of my family, they've just started to get back into work. Being from a working-class background from Liverpool, it's a subject common to the city. On the flipside, they might only start work this week, but you can be guaranteed that they'll be out on Friday and Saturday for a pint. It's never that bad really, is it?' he grins.
It's a question Merseysiders are asking themselves. Although in July unemployment fell for the sixth successive month across Liverpool, to 49,950, there are predictions that the number of people out of work in the UK will start rising later this year, throughout 2011 and peaking in 2012. The region is heavily reliant on the public sector for employment and there's no doubt that the coalition government's cuts will have a considerable negative impact. And with construction, manufacturing, retail and real estate the sectors worst hit, is it realistic to expect corporates to pick up the slack? The future prosperity of Liverpool may well ride on plucky entrepreneurs such as Ben-Yusef and Boardman.