April 2008

NEWS

Darling puts stability at heart of cautious Budget
Chancellor Alistair Darling delivered his first Budget on 12 March, presenting it as “a responsible Budget that will secure stability in these times of global uncertainty”. It contained few surprises (apart from higher-than-expected hikes in duty on alcohol and gas-guzzling cars), reflecting the fact that the Chancellor had little room for manoeuvre. There were, however, a number of measures aimed at sustaining business growth in the UK.

Mr Darling reduced his forecasts of economic growth for this year and next, revising the 2008 growth forecast from 2.25 per cent to 1.75 per cent, and 2009 to 2.5 to 2.75 per cent, before returning to trend in 2010. This was assuming that the current global credit crunch would be short-term and would have few lasting effects. Inflation would rise in the short term but would return to the Government target of 2 per cent next year. Government net borrowing would be higher than anticipated, rising by $14 billion next year to $86 billion or 2.9 per cent of national income. “Despite the slowdown in the world economy, in 2007 the British economy grew by 3 per cent – the fastest growth of any major economy,” said the Chancellor, pointing out that 2008 growth in the UK would still be higher than in Japan, the US and the euro zone.

In the business sphere, the main rate of corporation tax will be cut from 30 per cent to 28 per cent, giving the UK the lowest rate of all G7 countries. As previously announced, a new flat rate of capital gains tax for individuals of 18 per cent will be introduced from April, up from 10 per cent. On a more positive note for small businesses and entrepreneurs, the Small Firms Loan Guarantee scheme, which helps growing firms gain access to capital, will increase by $120 million over the course of the next year.

Increased funding will also be available to businesses from the Enterprise Investment Scheme and Enterprise Management Scheme, with an increase in the tax relief threshold for investors, and a capital fund of $25 million will be established to encourage more female entrepreneurs. Greater access to government contracts will help more private businesses access public sector opportunities. Mr Darling is keen to see 30 per cent of all public sector business handled by small and medium-sized enterprises (SMEs) within the next five years.

On personal taxation, as previously announced, the basic rate of income tax will drop from 22 per cent to 20 per cent from April, with the 10 per cent band being abolished. A new annual charge on non-domiciled residents will be introduced from April. This is expected to be $60,000, although opposition to these plans saw Mr Darling make a number of concessions from earlier proposals.

Mr Darling imposed a new charge of $1,900 on buyers of high-polluting vehicles from next year, but drivers of low-polluting cars will pay no car tax for the first year from 2010. Other environmental measures included an increase in duty on air travel and a possible tax on plastic carrier bags from 2009 if retailers fail to take voluntary action to curb their use. There was a 9 per cent increase in taxation on alcohol plus additional hikes of 2 per cent above inflation until 2013, with beer, wine and spirits all hit. Duty on tobacco was also raised. However, there were increases in child benefit for families and help for pensioners with fuel payments.

Business leaders gave a cautious welcome to a muted Budget. “The Chancellor didn’t set the Thames alight, but then he didn’t have anything to set it alight with,” commented Richard Lambert, director-general of employers’ organisation the Confederation of British Industry (CBI).

London confirms status as top investment location
London has been confirmed once again as the top European location for foreign direct investment, sweeping the board in the 2008 Cities of the Future list compiled by fDi magazine and published by the Financial Times. The UK capital came first in six categories in the annual awards, being voted the top overall European destination, the most attractive place for FDI and first among the top 10 major European cities, as well as being the most business-friendly city in the continent, with the best quality of life and the best infrastructure.

Economic potential, ongoing investment projects and a strong business infrastructure were among the factors that put the city at the top of the league table. Scotland meanwhile ranked top of the magazine’s Regions of the Future shortlist. The UK’s double victory came after fDi revised its Locations of the Future methodology, taking into account 75 indicators of locations’ attractiveness for investment and potential for economic development. The magazine sent questionnaires to more than 1,000 cities and regions across Europe in summer 2007, asking about inward investment and plans for economic development.

The resulting top 50 Cities of the Future included 16 from the UK, six from Germany and four from the Netherlands. UK locations also accounted for five of the top 25 regions, while Switzerland and France each had four locations in the top 25. London is likely to remain Europe’s dominant city for the foreseeable future, according to accountants PricewaterhouseCoopers, who predicted that the city’s GDP in 2020 would be $708 billion, more than 15 per cent higher than that of its nearest rival, Paris.

Commenting on the results, Michael Charlton, chief executive of Think London, the capital’s FDI agency, said: “This is fantastic news for London. We continue to be the number one European destination for foreign direct investment for businesses looking to globalise and this is thanks to key strengths including our top-ranking infrastructure and business environment.”

Mayor of London Ken Livingstone added: “London is the international city of the world not only in terms of the business it conducts, but also with more nationalities in the capital than any other place on the planet. It is a city that has moved ahead of all others because it has embraced globalisation and is again now opening itself up to the rapidly growing market economies of China and India. It is a city that is on the cutting edge of international technology, finance and business.”

The capital has also emerged as the world’s most culturally vibrant city in a report produced by the London Development Agency. The report, which compared London with New York, Paris, Shanghai and Tokyo, showed that the city has more national museums, musical venues, public art galleries and major theatres than all its major competitors. The report, London – A Cultural Audit, concluded that culture was “inextricably linked” with business and pointed out that in 2005 some 554,000 people, or 12 per cent of the city’s workforce, were creatively employed in the cultural sector, which added more than $40 billion a year to London’s output. London also had the highest number of cultural consumers of the five cities surveyed, with 3.8 million cinema admissions annually, 12.4 million theatre admissions and 2.7 visits per capita to top museums and galleries.

“Nobody comes to London to visit its bankers. Cities are not remembered for their economies, but for what they achieve culturally,” said Mayor Livingstone, who at the same time announced the launch of a new $2.8 million fund for organisations to develop cultural projects in the run-up to the 2012 London Olympics.

Chinese and US investors set up shop in capital
London’s attractiveness is underlined by the recent arrival of two of China’s leading companies: China Mobile, the world’s biggest mobile network operator, and CCTV, the state broadcasting giant. China Mobile has opened its European and Africa headquarters in the capital, with the assistance of Think London and UK Trade & Investment. The company is the latest in a string of Chinese telecommunications firms to locate their headquarters there.

China Mobile is the world’s largest mobile operator by subscriber base. This grew by 21.4 per cent in the first six months of 2007, to total 369.3 million subscribers by the end of the year. The company operates basic mobile voice and value-added services such as data, IP telephone and multimedia. It has provided GSM roaming services to more than 271 operators in 206 countries and regions, and GPRS roaming services to more than 93 operators in 101 countries and regions.

Henry Ge, chief representative of China Mobile said: “As the world’s leading mobile telecoms operator, it is important that we have a strong presence in Europe. London is the best place for us to be as it is at the heart of technology convergence in Europe, and offers us access to the technical capability and expert talent we need in order to grow our business.” The mobile phone industry market is set to rocket worldwide, with more than 1 billion new subscribers expected by 2010 in developing countries alone.

Meanwhile China Central Television (CCTV), the largest broadcaster in China, has joined the growing hub of media companies based in London, starting operations from new studios in Camden in the north of the city. London is acknowledged as a worldwide broadcasting centre, with many international broadcasting and media companies being attracted by its skilled workforce and excellent connections. Zhao Hua Yong, president of CCTV, said: “In this day and age countries around the world hold lavish Chinese Lunar New Year celebrations … Each celebration reflects the close bonds China has with these European countries: ties that are political, economic and cultural. CCTV Europe will be the eye-witness, the communicator and promoter of these developing relations.”

FDI into London from North America also continues to grow, despite the global economic slowdown, with inward investment from North American companies assisted by Think London increasing by 27 per cent last year. In response to this growth, led primarily by US technology firms, Think London has appointed a new director of business development for North America. Richard Stanaro, based in San Francisco, is responsible for managing the agency’s business development team in its San Francisco, New York and London offices. Stanaro, who joined Think London in 2007, has 25 years of experience in accountancy, finance, international development and international banking. He was previously a senior banker at the European Bank for Reconstruction and Development.


New national strategy aims to unlock entrepreneurial talent
The Government has announced a raft of major new initiatives covering enterprise, innovation and the creative industries. Enterprise: Unlocking the UK’s Talent is a new ten-year strategy that aims to make the UK the most enterprising economy in the world, according to HM Treasury and the Department for Business, Enterprise and Regulatory Reform (BERR). It is designed to boost enterprise skills and knowledge, help new and existing businesses with funding and ease the burden of regulation, particularly on small firms. The strategy details five areas in which the Government will focus its efforts: culture, knowledge and skills, access to finance, business innovation and regulatory framework.

Specific proposals include consulting on the introduction of a new system of regulatory budgets for Government departments that would set out the cost of new regulation within a given period; exempting or simplifying enforcement of new regulation for small firms; and an independent review to recommend ways of helping small businesses to comply with legislation, initially focusing on employment law.

Other proposals include extending a number of lending and funding schemes; funding the National Council for Graduate Entrepreneurship to establish a national network of university enterprise clusters; providing tailored support for young entrepreneurs, the over-50s and women; and a set of detailed measures promoting business-to-business mentoring, work placements, skills training, improved careers advice on self-employment and access to business support and finance for growth. One important element of the plan is an additional $60 million that will be used to extend enterprise education to primary schools and further education colleges. The Government implemented a strategy to promote enterprise education in secondary schools in 2005, as a result of which over 90 per cent of secondary schools now offer enterprise education for 14- to 16-year-olds.

Another initiative is a new National Enterprise Academy (NEA), to be set up in partnership with entrepreneur Peter Jones, which will offer skills training and qualifications to 16- to 19-year-olds. The NEA, which is due to open in early 2009, will be part of the National Skills Academies programme and will offer teenagers a new qualification in enterprise. It will also aim to raise enterprise awareness across the entire population, including encouraging more female entrepreneurs. The first Academy will open in South East England, followed by another in the North West and then a national roll-out of satellite academies.

Peter Jones, who made his fortune in the telecommunications sector, is a regular on BBC TV’s Dragons’ Den show, which features budding entrepreneurs, and has also appeared on ABC’s American Inventor in the US. He said: “There is a stark difference in the entrepreneurial mindset between the UK and the US. Here, there tends to be a ‘Can I?’ approach, whereas in the US, the ‘I can’ belief is instilled from an early age. If the UK economy is to continue to grow, we need to create the right learning environment for all our children.”

As well as these measures, there will be independent review of barriers to small and medium-sized enterprises (SMEs) winning a greater proportion of Government contracts. The new policy priorities are the result of six months of consultation with more than 600 businesses and business leaders, meetings with representative bodies and economic analysis. Prime Minister Gordon Brown said: “The UK is well placed to meet the challenges of globalisation, but our ability to succeed in the new world will be defined first and foremost by our adaptability. Our success as a trading nation – whether in products, services or knowledge – has and will always result from a spirit of openness, enterprise and innovation. We must unlock this talent.”


Encouraging innovation put at heart of government strategy
Another initiative, contained in a White Paper published by the Department of Innovation, Universities and Skills (DIUS), seeks to harness the power of Government spending to create demand for innovative products and services. The Government’s Innovation Nation strategy was unveiled the day after the Budget, in which Chancellor Alistair Darling said he would look into the practicality of setting a goal for SMEs to win 30 per cent of all public sector business within the next five years.

The White Paper spells out how the Government creates demand and new markets through $300 billion in public spending on goods and services each year, alongside its regulatory responses to global challenges such as climate change. It sets out a number of practical measures, including a commitment for each Government department to publish an Innovation Procurement Plan as part of its commercial strategy, setting out how departments will embed innovation in their procurement practices and engage with businesses. It also initiates work to review the role that regulation can play in promoting innovation, and considers how Government and society respond to changes in innovation.

Headline commitments include supporting businesses through five new ‘innovation platforms’ to coordinate Government support and funding to firms and organisations involved in developing new products and solutions, which builds on the approach of the existing Technology Strategy Board (TSB); a new initiative to provide at least 1,000 ‘innovation vouchers’ every year by 2011, which will help SMEs to fund work with universities or other institutions to develop new products or services; and a doubling in the number of Knowledge Transfer Partnerships set up between businesses, universities and colleges.

In addition, there will be a new Specialisation and Innovation Fund to boost the capacity of further education colleges, and the network of National Skills Academies will be expanded, with one academy for every major sector of the economy. New Partnerships for Innovation will be sponsored, bringing together venture capital with universities, businesses and local partners to develop solutions to local and regional challenges. An Innovation Index will be piloted in 2009 to measure innovation in the UK, and there will be a new Innovation Research Centre and an Annual Innovation Review to provide a comprehensive annual assessment of promoting innovation in the public and private sectors.

John Denham, Secretary of State for Innovation, Universities and Skills, said: “Innovation will be the key to some of the biggest challenges facing our society, like global warming and sustainable development. We need to ensure that Britain contributes to the innovative solutions and that British business and the British people benefit from the new opportunities and prosperity they create.”



Creative industries move centre stage in policy thinking
Meanwhile BERR has published a comprehensive plan for Government support for the creative industries, bringing the sector into the mainstream of economic and policy thinking. The strategy, Creative Britain: New Talents for the New Economy, makes 26 key commitments for Government and industry across every stage of the creative process, and is designed to help creative businesses thrive in the international market. Among these commitments are promises to create 5,000 apprenticeships in the creative industries by 2013; an independent review to investigate next-generation broadband; a World Creative Business Conference that will bring together leaders in the creative and financial sectors; and steps to protect intellectual property, including a commitment to take action on illegal file sharing.

Culture Secretary Andy Burnham said: “Our vision is of a Britain in ten years time where the local economies in our biggest cities are driven by creativity. That’s why we need a clear action plan for both Government and industry to keep our competitive advantage. We want to take raw talent, nurture it, and give people the best possible chance of building a successful business.”

A number of organisations have already committed to provide apprenticeship schemes, including the BBC, Tate Liverpool, Universal Music Group and Monkeydevil Design. The Government also plans to work with successful companies such as Aardman Animations, EMI and the Royal Opera House to develop five new ‘centres of excellence’ in creative skills, and will look into setting up an Academic Hub for the creative industries, which will bring together schools, art colleges and universities. Networks of ‘regional beacons’ will be established across the country to help creative industries make the most of the business support that is available.

The UK’s creative industries accounted for $120 billion, or 7.3 per cent of gross value added (GVA) in 2005, and grew by an average of 6 per cent per annum between 1997 and 2005, twice as fast as the rest of the economy, according to BERR. In 2006, 1.1 million people were employed in the creative industries and a further 800,000 in creative jobs in other businesses. The sector’s exports of services totalled $29.2 billion in 2005, equating to 4.5 per cent of all exports. The largest 200 creative industry firms account for 50 per cent of total turnover, although concentration ratios vary considerably by sector. Foreign-owned firms account for 20 per cent of employment and 28 per cent of turnover. Software and computer games comprise the biggest single sector and contribute most to growth, accounting for over 50 per cent of growth in turnover between 1995 and 2005.

A husband and wife team who set up the social networking site Bebo sold their company in March to AOL, the internet arm of US media company Time Warner, for $850 million. Michael and Xochi Birch, who met as students at Imperial College London, set up the site in July 2005 and built it into the top networking site in the UK and Ireland and the third largest in the US after Facebook and MySpace. The couple earned $595 million from the sale of their 70 per cent stake in the company, while venture capital company Balderton saw a return of $140 million on its original $15 million stake. It is believed that AOL will build on Bebo’s member base of 40 million users by moving towards an advertising-based model that will increase revenues.


New universities and apprenticeship places set to boost skills
The Government has announced plans to open 20 new universities across the UK, to encourage economic growth and increase the number of skilled workers available to business. The new institutions will offer places for 10,000 students by 2014. A report published to coincide with the announcement highlighted the economic and social contribution of universities to the UK economy. It showed that they are a force for economic regeneration, creating a highly-skilled workforce, providing job opportunities, boosting competition and forging links with businesses. The UK’s labour force of over 30 million people is the second largest in the European Union.

Secretary of State for Innovation, Universities and Skills John Denham commented: “Never have universities and colleges been more important to our country, both nationally in ensuring our success on the world stage and locally in our towns and cities through the creation of jobs and new skills, driving regeneration and enriching cultural life.”

Meanwhile, leading UK employers have committed to adding over 4,000 apprenticeship places to mark the Government’s first ever Apprenticeships Week in February, which was sponsored by the Learning and Skills Council. Vodafone has committed to 2,000 apprenticeship starts in 2008-09, Superdrug to 1,000, retailer Sainsbury’s to 400, Barchester Healthcare to 350 and infrastructure company Veolia to 250, all substantial increases on current numbers. Mobile phone company Phones4u has set up a new programme that will take on more than 200 apprentices by the end of this year.

Veolia and optician Dollond & Aitchison are among a group of employers working with the Government to pilot an ambitious new programme of ‘over-training’. Already running successful apprenticeship programmes, these companies are offering to train a greater number of apprentices than their own organisation needs in order to build up skills in their local area and supply chain. New research from the Learning and Skills Council shows that apprenticeships programmes can bring significant benefits to employers. Some 88 per cent of employers believe that apprenticeships lead to a more motivated and satisfied workforce, it reports.

The Learning and Skills Council meanwhile, which is responsible for all vocational training in the UK, will be wound up by 2010 and most of its $22 billion annual funding – about $14 billion – will be passed to local authorities for the education and training of teenagers. The remainder, to be used for the training of adults, will be administered by a new body known as the Skills Funding Agency.

In a separate announcement, the Government has said that the adult National Minimum Wage (NMW) rate will rise from $11.04 to $11.46 an hour from October. The rate for 18- to 21-year-olds will increase from $9.20 to $9.54, while that for 16- to 17-year-olds will rise from $6.80 to $7.06. It is estimated that nearly one million low-paid employees, two-thirds of them women, will benefit from the increase.

 

Terminal 5 experiences turbulence on take-off
	The new Terminal 5 at London’s Heathrow Airport was officially opened by Her Majesty the Queen in mid-March and began operations at the end of the month. The first aircraft to touch down at the new flagship facility was a British Airways flight from Hong Kong. However, the opening days were marred by teething troubles with baggage handling and check-in systems that led to delays and flight cancellations.
Opening of Heathrow T5, (L to R) BAA CEO Stephen Nelson, BAA Chairman Sir Nigel Rudd, Mike Forster (Strategy Director BAA), The Queen, Lord Rogers, Mike Davies (Principal T5 Architect), Ray O'Rourke (Laing O'Rourke Chairman). Picture: BAA.

These glitches aside, the new terminal will be a flagship for British Airways, its sole tenant. It is one of the biggest infrastructure projects ever undertaken in the UK. Construction began in September 2002 on the $8.6 billion pound project, designed by leading architects the Richard Rogers Partnership, and was completed on time and on budget. The spectacular terminal is the biggest freestanding building in the UK: 40 metres high, 396 metres long and 176 metres wide, it is five times the size of Terminal 4, previously BA’s main long-haul base.

The site is located between Heathrow’s two runways on land previously occupied by a sludge works, and construction involved moving 9 million cubic metres of earth and diverting two rivers. The area has been extensively landscaped and a number of environmentally friendly features have been incorporated into the building itself. Water from rainwater harvesting and groundwater boreholes is being used for non-potable uses, while waste heat from Heathrow’s combined heat and power station provides 85 per cent of the terminal’s heat on demand.

T5 is built on five levels, each designed around the different stages of the passenger journey, and its walls and roof are glazed with 30,000 square metres of reinforced glass and 5,500 glass panels. The baggage system is the biggest single-terminal baggage handling system in Europe, containing 18km of belts and capable of transporting 12,000 bags per hour around the terminal. There is also a wide array of retail, lounge and hotel facilities.

On its own, T5 is bigger than most of the world’s airports, and is about the same size as London Gatwick. From the outset, it will be able to handle 30m passengers a year, while a second satellite building due to open in 2010/2011 will increase this to 35 million. BA plans that 80 per cent of its customers will either check in online or use self-service kiosks at the terminal. Hold baggage is left at fast bag drop desks, speeding up the check-in process. About half of the airline’s operations transferred to T5 on opening, with the rest due to follow in stages over the next year. With most of its operations under one roof, about 85 per cent of passengers will be transferring to flights in the same terminal.

Earlier in March, Heathrow’s Terminal 3 inaugurated the first commercial super-jumbo service to Europe with the arrival of a Singapore Airlines Airbus A380 carrying 449 passengers. Heathrow is expected to become the leading hub globally for the world’s biggest passenger jet, which will further drive up passenger numbers. New A380 services will be introduced in the second half of 2008 by Qantas of Australia and Emirates of Dubai, and more than 90 of the huge aircraft are expected to be operating from Heathrow by 2020. British Airways has ordered 12 super-jumbos, with the first due to go into service in 2012, and Virgin Atlantic has ordered six, with the first due into service in 2013. Airport operator BAA has invested $900 million to prepare for the arrival of the A380, including building new stands and airbridges, widening taxi-ways, resurfacing runways and extending the arrivals hall at Terminal 3 to accommodate bigger baggage carousels.


Ryanair boosts Edinburgh’s role as aviation hub
In other transport developments, low-cost airline Ryanair is to base two planes at Edinburgh Airport as part of a $140 million expansion of its services, which is expected to create 1,200 jobs and attract an extra 1.2 million passengers to the Scottish capital. The carrier will offer 12 direct routes to a number of European destinations, including Berlin, Bratislava and Stockholm, the Polish cities of Poznan, Krakow, Lodz and Wroclaw, and the holiday destinations of Malaga and Palma. Some flights commenced at Easter, while others are due to start in September. The announcement increases the total number of destinations served by Ryanair at Edinburgh to 19, up from just two routes last year, to Dublin and Shannon. Edinburgh Airport now has more than 40 airlines serving more than 100 destinations, and handles more than nine million passengers a year.

In North East England, shipping minister Jim Fitzpatrick has approved an application by PD Teesport to allow expansion of container terminal facilities at the port to go ahead. The proposed Northern Gateway development will increase the port’s capacity from around 250,000 teu to around 1.5 million teu a year.

Transport Secretary Ruth Kelly has published new plans to tackle congestion on the UK’s busiest motorways. A Department for Transport feasibility study into extending a pilot of hard shoulder running on the M42 near Birmingham has identified around 800 lane kilometres of motorways that could benefit from using the hard shoulder as an extra lane. These include sections of the M1, M6 and M62, the M27 around Southampton, the M4/M5 near Bristol and motorways feeding into the M25. Other measures under consideration include car-share or charged lanes. Further funding will be dedicated to helping towns and cities implement schemes such as congestion charging, with the $400 million a year Transport Innovation Fund extended for an extra four years.

On the railways, operator Southern Railway has ordered 44 new carriages, comprising 11 four-car trains, to run on the upgraded Thameslink line from Bedford, north of the capital, to Brighton on the south coast. The $106 million order will see the Electrostar trains – to be built at Bombardier Transportation’s factory in Derby, East Midlands – delivered in spring 2009. A further 48 carriages, ordered last May, are due for delivery later this year. New cross-London services on the route will mark the first stage of a $7 billion upgrade programme that will increase capacity and extend access to commuter services. In Sheffield in South Yorkshire, meanwhile, trials are to be carried out of ‘tram-train technology’, with mainline trains running on existing tram tracks through city streets.

EADS tanker contract promises new orders for UK companies
The victory of Franco-German aerospace group EADS over its US rival Boeing in winning a contract to supply the US Air Force with in-flight refuelling tanker aircraft is expected to lead to a bonanza of new orders for European companies, including several in the UK. The huge defence deal, won by EADS in collaboration with US partner Northrop Grumman, has sparked controversy in the US but marks a new stage in the battle between Boeing and its European rival, which also produces Airbus aircraft for the civil aviation market. The contract involves the procurement of around 15 Airbus A330 jets a year – 179 in all – and is worth an estimated $35 billion over the period 2009-2020. Following a number of recent contract wins for tanker aircraft in other countries, including the UK, Australia, Saudi Arabia and the United Arab Emirates, the deal also establishes the A330 as the preferred platform for tanker aircraft worldwide.

Sixty per cent of manufacturing operations for the new aircraft will be carried out in the US, but EADS plants in France, Spain and Germany will see big additions to their order books. For the UK, the deal is worth around $6 billion and represents the second biggest defence export this decade, after a deal to supply Eurofighter Typhoon aircraft to Saudi Arabia. UK factories will build all the wings for the A330-200, with wings being assembled at Broughton in North Wales and important sub-assemblies carried out at Filton near Bristol, a site owned by GKN. Other UK companies likely to benefit include Messier-Dowty, Magellan and Cobham, which will produce equipment to transfer fuel between the planes.

Elsewhere in the sector, a leading US firm is collaborating with a UK-based team to develop the next generation of green aircraft fuel systems. Goodrich Corporation, a Fortune 500 company, is taking part in the Environmentally Friendly Engine (EFE) technology programme, which involves commercial and university partners and is led by UK aerospace and automotive giant Rolls-Royce. Goodrich’s Engine Control and Electrical Power Systems team, based in Birmingham in the West Midlands, is Rolls-Royce’s largest partner on the programme; the team says it hopes to deliver the next generation of electronic and fuel system controls over the next five years. Among the ideas under consideration are engines that emit 20 per cent less carbon dioxide, 80 per cent less NOx and a reduction in noise of 18 decibels.
 

Initiatives in energy sector add to national power mix
The UK has signed up to the Global Nuclear Energy Partnership (GNEP), a US-led initiative that promotes international collaboration in developing spent fuel processing technology and advanced breeder reactors. Business Secretary John Hutton signed the agreement during a visit to Washington DC in February, and also met with US energy companies to discuss potential investment in new nuclear construction in the UK. This followed the Government’s recent announcement that it would invite proposals for new nuclear power stations as part of the UK’s long-term energy mix.

The UK is the 21st country to join the GNEP partnership, which promotes responsible nuclear development while reducing volumes of waste and the risk of nuclear proliferation. The agreement enables the UK and other developed countries to share experience on a wide range of issues, such as infrastructure assessments, security and safety requirements. As a member, the UK will be able to contribute to the development of international policy on the use of nuclear power, non-proliferation and the disposal of nuclear waste to ensure the safe development of nuclear energy worldwide.

The University of Manchester in North West England has announced plans to set up a Centre for Nuclear Energy Technology to help plug skills gaps in the UK’s nuclear sector. Cogent, the nuclear industry body, has warned that more than 9,000 graduates may be needed over the next 10 years, along with up to 4,500 other skilled workers for jobs such as mechanical work and essential checking.

The university plans to address this need by raising $49 million for investment in the centre, which will start training nuclear workers and conducting nuclear research this year. It already hosts the Dalton Nuclear Institute, but outside Manchester and other universities such as Imperial College London there is a real lack of funding for nuclear R&D. The new centre has so far secured about one-third of the funds it needs from industry and the university. A separate National Skills Academy for Nuclear was set up earlier this year to help design courses and provide advice to employers.

The Department for Environment Food and Rural Affairs (Defra) has announced that it will invest $800 million in the development of renewable energy and waste management technologies over the next three years. Under the plans, the Carbon Trust will receive $94.8 million for the development of offshore energy options and third-generation photovoltaic power. More than $4 billion will be provided in Private Finance Initiative credits for waste management projects, while spending on flood protection will increase to $4.3 million as part of the wider Defra budget.

A new incubation centre in North West England is to offer specialist support to start-up companies developing new renewable energy and environmental technologies. The Capenhurst Energy Innovation Centre will be located near Chester at the premises of EA Technology, which was originally established as an R&D centre for the UK electricity industry. Specialist R&D facilities will be available, and companies will also have access to electricity network operators who will be prospective customers for their technologies. Electricity North West, Scottish Power and CE Electricity are all partners in the project and will provide financial assistance. The energy sector currently contributes $10 billion to the regional economy in the North West and employs 50,000 people. Robert Davis, managing director of EA Technology said: “The Energy Innovation Centre will become a national icon of good practice, helping accelerate new products and services to market.”

An $8.8 million research centre under construction in Aberdeen in Scotland is set to provide accommodation for small energy companies and help them to develop new products and services. Based at the Aberdeen Science and Energy Park, the Energy Development Centre will facilitate innovation, helping companies develop alternative energy sources to oil and gas. The centre, financed by Scottish Enterprise, will specialise in helping small firms to commercialise their research, and is at the heart of a project to create a cluster for energy technology development stretching across a 30-mile area. The first phase of building work on the centre – which will be powered by biomass and wind power – is set for completion in November.

German-owned energy company RWE Npower has formed the UK’s first consortium to develop a carbon capture power plant, together with partners Tullow Oil and BOC. It will be competing for government funding with rival Eon to be the first to build a coal-fired power station featuring carbon capture technology, which stores carbon dioxide rather than releasing it into the atmosphere. RWE Npower is believed to be focusing its attention on a site at Tilbury in Essex, Eastern England, where it already operates a coal-fired power station. It is believed to planning a new 1,600MW plant costing some $2 billion at the site.


Plans progress for major regeneration projects
Plans for Europe’s largest covered leisure, activity and convention destination, the $700 million YES! Project in Rotherham, Yorkshire and Humber, are at the final stages of the approval process, and developers are looking to attract tenants for the project. Extreme sports company Venture Xtreme UK Ltd and golf driving-range specialist Baydrive Group have already signed up, while others have expressed strong interest.

The futuristic scheme will transform 327 acres of former coalfield land into a national and international leisure destination. As well as golf and sports attractions, it will include major indoor entertainment facilities, a four-star resort spa and conference hotel, an exhibition centre, restaurants, bars, cafés and shops. Half of the UK population lives within a two-and-a-half-hour drive of the development, and it is close to Sheffield’s Meadowhall shopping centre and the Peak District, each of which attracts 28 million visitors a year. Transport facilities will include improvements to local roads, a bus terminal, shuttle services to key destinations including Robin Hood Airport Doncaster Sheffield and dedicated cycle routes within the project.

Work is progressing on Ramsden Business Park, the first phase of The Waterfront Business Park in Barrow-in-Furness in Cumbria, North West England. Initial infrastructure work and site preparation started in mid-October and applications are now being considered from developers to create a planned 212,700 sq ft of business accommodation. Local urban regeneration company West Lakes Renaissance is overseeing the development, which is taking shape on land formerly owned by Associated British Ports. The mixed-use business park forms an important part of the $400 million Waterfront Barrow-in-Furness Masterplan, which will transform redundant dockland into a series of business, leisure and residential developments.

Work is under way on the final phase of Spectrum Business Park, located on a former 34-acre colliery site in Seaham, County Durham in North East England. The development consists of eight flexible office buildings, Spectrum 1 to 8, which are available to let either complete or as individual floors and wings, with rents from around $24 per square foot. The site was reclaimed and developed with money from the National Coalfields Programme (NCP), run by English Partnerships and RDA One NorthEast. The project could create as many as 3,500 jobs, according to its backers.


North East exporters perform above the average
Statistics from HM Revenue & Customs show a big leap in exports from North East England, with a 13 per cent increase in total value, from $17 billion in 2006 to $19 billion in 2007. This bucked the national trend, which saw total UK exports falling by 10 per cent, from $488 billion to $438 billion. The North East recorded significant growth in exports to a number of emerging economies, as well as building on established successes abroad. It recorded substantial growth in exports to Japan (289 per cent), Russia (133 per cent), Brazil (62 per cent), South Africa (59 per cent), the US (32 per cent), China (30 per cent) and the Netherlands (29 per cent).

The region’s continued growth and traditional strength in the automotive and process industry sectors was a major factor in its performance. The best-performing sectors in 2007 were road vehicles (exports worth $5 billion, up 38 per cent on 2006) and medicinal and pharmaceutical products ($3.4 billion, up 45 per cent). There was also strong growth in export value recorded in plastics in non-primary forms (up 48 per cent), power generating machinery and equipment (up 25 per cent) and manufacture of metals (up 23 per cent).

Ian Williams, director for business and industry at Regional Development Agency (RDA) One NorthEast, said: “This report is further evidence of the growing strength of the North East economy, which has outstripped UK average annual growth for the past three years. The recent fantastic announcement that Nissan is to create a further 800 jobs is further proof that the North East is performing well.”

Meanwhile two groundbreaking projects in the North East have been held up as best practice by the Government under its new innovation strategy. The new Science and Innovation White Paper from DIUS highlighted the Centre for Process Innovation (CPI) in Middlesbrough and the Designs of our Times (Dott 07) campaign, which was held recently in the region to promote design and innovation. One NorthEast welcomed the White Paper, which confirmed that it and other RDAs would have greater powers to lead on innovative projects and to support entrepreneurial companies in their home regions. Under the new strategy, national and regional innovation programmes will be aligned between DIUS and RDAs, the Technology Strategy Board, the Devolved Administrations, local authorities and other partners including business and universities.



Regional news
London is to host a new $20 million research facility that promises to transform the future of medical technologies. The Hamlyn Centre for Robotic Surgery will offer a unique opportunity for the development of robotic devices to be used in conjunction with traditional keyhole surgery, according to its backers. Funded by the Helen Hamlyn Trust, the centre will bring together scientists from a range of disciplines to create ‘microbots’ for use by other UK research organisations and industry bodies. “The potential benefit of medical robotics to patients is exciting and one of the major focuses of the centre is to develop new technologies […] to allow safe, ubiquitous applications of robotics in healthcare,” said Professor Guang-Zhong Yang, the centre’s director of basic sciences and engineering research. Sir Richard Sykes, rector of Imperial College London, added: “This will allow us to attract international talents and develop UK technologies that will transform the future development of medical devices.”

New York-based Last Exit, a digital marketing company, has launched a UK operation in London. The new office will be the focus of new products and services, including more branding and search-based offerings, and will complement the company’s existing team in New York. Nuri Djavit, founding partner and creative director, highlighted the growing opportunities for digital and creative firms based in London. “After the US, London is the largest digital market globally and is growing significantly. It’s something we’ve been watching for many months and a great opportunity has presented itself,” he said. Formed in 2004, Last Exit’s clients include multinationals such as Unilever, Viacom and Time Inc.

An Australian digital marketing firm, Facilitate Digital, has opened a UK office in the Soho area of London. Based at the heart of the city’s media community, the new office will help the company to extend its portfolio and boost its global profile. Chief executive Ian Lowe said: “We are excited about the opportunities ahead. With our offices across Europe, Southeast Asia, Australia, New Zealand and now the United Kingdom, Facilitate Digital is further strengthening its global expansion.”

New Zealand software firm SentryBay, which specialises in internet security solutions, is setting up a headquarters operation in London’s financial hub, the City of London. The firm is looking to take its technology, described by chief operating officer Marcus Whittington as “the key solution to internet fraud”, to a range of new markets. The move was facilitated by UK Trade & Investment’s Global Entrepreneurs Programme (GEP), which offers support and guidance for high-tech entrepreneurs looking to establish a base in the country.

New York-based software consultancy Lab49 reports that it has experienced a “remarkable year” since opening a London office in 2006. The company has seen an increase in revenue and profits, as well as operational growth and a diversified client base. Vivake Gupta, managing director and co-founder of the firm, commented: “Our UK operations now account for over a third of the group’s revenue. London’s financial services market remains one of the most demanding technology centres in the world and, in response, we continue to push the envelope in coming up with innovative solutions for our clients’ real-world challenges.” He added that the new office has allowed the company to work with other technology firms in Europe to develop new innovations in financial services technology.

Morgan, a specialist British car manufacturer based in Malvern in the West Midlands, has developed the world’s first zero-emissions car. The LIFEcar, unveiled at the Geneva Motor Show, uses fuel cells to convert hydrogen into electricity and is considered to be the world’s first environmentally clean sports car. Morgan worked in partnership with QinetiQ, the UK-based defence technology firm, and researchers from Oxford and Cranfield universities to develop the technology for the low-cost car. The breakthrough was facilitated in 2005 by a $3.8 million investment from the Department for Trade and Industry (now known as the Department for Business, Enterprise and Regulatory Reform). Ian Whiting, business development manager at QinetiQ, said: “LIFECar is about catching the first big wave in the energy revolution, which is set to transform the motoring industry in the same way that the computer industry was transformed by the personal computer decades ago.”

Yorkshire and Humber’s 12-strong network of Centres of Industrial Collaboration (CICs) has won a top European award, the RegioStars 2008 award for innovation. The awards recognise technological innovation across Europe that have encouraged regional economic growth. The CICs were shortlisted from 71 nominations from 18 European states, and took the award for technology transfer to SMEs. Based in university departments across the region, the CIC centres connect academic experts with businesses in need of technical support. Since their launch in 2003, they have collaborated with companies on 1,400 separate occasions and have generated more than $100 million in research income for the region.
 

A contact centre company which opened a second office in North East England just 12 months ago is aiming to establish itself as an industry leader in the region after undergoing a major revamp. Fusion, which works with motor and home insurance companies around the UK, opened its office in Peterlee, Co Durham in March last year and has quickly expanded its operations. It already employs 200 people at its centre at Bracken Hill Business Park, along with a further 350 at a sister site at Hylton Riverside in Sunderland. With further growth predicted, the company has confirmed plans to create a further 400 jobs at its Peterlee offices by 2010. Fusion is part of the BGL Group, one of the UK’s leading personal lines insurance intermediaries, and handles calls for a number of well-known brands, including the Post Office, M&S Money, Bradford and Bingley and Debenhams.
 

US chemical firm Americhem has bolstered its operations in Manchester, North West England after recording a 10 per cent growth in its European business since 2000 and a 16 per cent rise in non-domestic sales. It has added a new research and development facility, an electronic colour-match system and a high-speed spinning line for the European nylon fibre market to its base in the Eccles area of the city. In 2007 the company won the Queen’s Award for Enterprise in the International Trade category, in recognition of sustained growth over the six years it has been manufacturing at its Manchester facility. International drinks firm Pernod Ricard is to reopen its production site at Braeval in Scotland after seeing an 18 per cent rise in half-year profits and increased demand for its Speyside whisky. Net profits at the company – Scotland’s largest whisky manufacturer – rose to $854 million for the six months ending 31 December 2007, on the back of higher sales of 15 key brands, including premium spirits. The distillery was first opened in 1973 by Pernod’s gin and scotch division Chivas Brothers, but has been empty for the past six years. Chivas chief executive Christian Porta said: “Demand for Scotch whisky is at a record high. This latest investment will enable us to meet our growing demand as well as demonstrate our commitment to developing our business in Scotland.” A joint research project between the University of Ulster in Northern Ireland and scientists from the United Arab Emirates University holds out the potential of a revolutionary treatment for Type 2 diabetes. A joint team of scientists from the two universities has discovered that a substance found in the skin of a South American frog could be used to treat the disease. Pseudin-2 offers the Paradoxical frog protection from infection and was found to stimulate the release of insulin. Researchers say it could boost insulin production in humans if an artificial copy is developed. It is hoped that a human version of pseudin-2 will lead to the creation of a new class of medicines, known as incretin mimetics, which would recreate substances found in the natural world.

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