November 2008

NEWS

Brown and Darling lead the way on bank bail-out
The UK’s largest banks received a $640 billion boost to their capital reserves in October after the Government launched a dramatic rescue plan to bolster confidence among financial institutions and avoid a banking collapse. Under the plan, the Government will invest up to $80 billion in the banking industry, offer guarantees on up to $400 billion of new bank debt and add £160 billion to the Bank of England’s existing short-term loan scheme.

With events unfolding rapidly, the bail-out plan unveiled by Prime Minister Gordon Brown and Chancellor Alistair Darling won praise internationally, and went some way to restoring the Government’s reputation at home. Brown claimed the rescue package “led the world” and predicted that other countries could follow Britain’s lead in guaranteeing interbank lending. Paul Krugman, the new Nobel laureate for economics, said that the UK government had shown “the kind of clear thinking that has been all too scarce in America. … The British plan isn’t perfect, but ... it offers by far the best available template for a broader rescue effort.”

Gordon Brown, Prime Minister; Alastair Darling, Chancellor

In the face of “extraordinary market conditions”, the Treasury said that the Bank of England would provide at least $360 billion under its special liquidity scheme until markets stabilised. “[We] will take all actions necessary to ensure that the banking system has access to sufficient liquidity,” said the Bank. The bold rescue plan uses tens of billions of pounds of public money, largely in the form of preference shares. So far three of Britain’s largest banks – HBOS, Lloyds TSB and the Royal Bank of Scotland – have agreed recapitalisation deals, meaning in effect that they have been partially nationalised.

However, banks taking up the government’s offer of capital face constraints on their ability to increase dividends or to pay executives big bonuses. They are also expected to make commitments to continue lending to small businesses and house-buyers. The government insisted that the terms and conditions of the new funding would “appropriately reflect the financial commitment being made by the taxpayer”. The Government said that the measures were designed to “ensure the stability of the financial system”, as well as protecting savers, borrowers and businesses.

The $80 billion bail-out equates to roughly $3,600 for every taxpayer and will more than double the UK’s planned public borrowing this year, pushing public sector borrowing close to $160 billion and exceeding 6 per cent of national income, the highest level since 1994–95. The rescue package has been presented by the Government as part of a wider attempt to reform markets, as well as forcing banks to show responsibility over top executive pay, now that the taxpayer has a direct stake.

During the same period, in another attempt to revive the global economy, six central banks, including the Bank of England, cut interest rates by half a percentage point. The Bank of England reduced its main rate from 5 per cent to 4.5 per cent, while the US Federal Reserve cut its rate from 2 per cent to 1.5 per cent and the European Central Bank (ECB) reduced its rate from 4.25 per cent to 3.75 per cent. The central banks of Canada, Sweden and Switzerland all took similar action in the co-ordinated move, while China trimmed its rate by 0.27 percentage points. The last time the Bank of England cut rates in a special meeting was on 18 September 2001, when rates were reduced from 5 per cent to 4.75 per cent. UK manufacturers’ group the EEF, for one, welcomed the “bold and decisive move”, hoping it would “arrest the current crisis and collapse in confidence”.

In another indication of the seismic shocks running through the financial system, the Bank of England has revised its money market rules to make them more effective. As with the Government’s bank recapitalisation plan, the move represents an attempt by the Bank to take the initiative ahead of other countries. It has made three major changes to its lending rules. First, it has established an ‘operational standing facility’, which will allow banks to borrow in exchange for top-quality collateral. Second, it has set up a ‘discount window facility’ for banks to swap their assets for government bills for a period of a month. Third, it is accepting wider collateral in its regular longer-term monthly auctions of cash. Bank of England Governor Mervyn King insists that central banks can offer only short-term relief, and not funding, for banks in need. The aim of the rules is to keep overnight market interest rates at the recommended official level of 4.5 per cent. King said he hoped the framework would offer a “systematic way to help banks plan access to central bank liquidity and so add certainty”.


Brown hints at sweeping changes in financial regulation
Gordon Brown defended the “unprecedented but essential” injection of $59.2 billion into Royal Bank of Scotland, HBOS and Lloyds TSB, saying that their partial nationalisation was intended to be temporary only, and that the Government would not be a permanent investor. The Prime Minister said that the state had a duty to “be the rock of stability” and to act to prevent systemic failure of the banking system. The government will have three directors on the board of RBS and two on the board of the merged HBOS/Lloyds TSB, and there will be no cash bonuses for the banks’ directors in 2008. The government intends the banks to operate on a commercial basis, despite the partial state ownership. It also intends to sell its shareholding back to the private sector as and when share prices recover. Chancellor Alistair Darling said that the banks would “be run on an arm’s length basis away from government. Ministers will not be taking day-to-day decisions.”

The Prime Minister also stated his belief that the City of London would come out of the banking crisis stronger than before, although he also called for radical reforms to global regulation. “London in my view is the great financial centre, working with New York ... I don’t see that changing,” he remarked. “This government will always work hard to advance London’s central role in the world financial system. We will not make the mistake of taking reflex and ill-considered actions when facing crises.” This last remark was thought to be a reference to the Sarbanes-Oxley Act in the US, which has been widely considered a regulatory over-reaction to the Enron scandal and which has led to London taking business away from New York.

Although Brown promised to avoid similar mistakes, this does not mean that City financiers can expect an easy ride. The Government has changed its emphasis from “light-touch regulation” to “effective regulation” and, although it is not yet clear what this will mean in practice, it is evident that the Government is considering radical regulatory reform. In its sights in particular are the conflicts of interest and the culture of irresponsible risk-taking endemic in the global financial system. Potential targets for reform include more responsibility of board members for oversight, greater openness and disclosure, the adoption of internationally agreed accounting standards and tougher regulation of credit reference agencies. The Prime Minister also called for reforms to ensure “sound banking practice” and a “new international financial architecture”.


Financial services sector predicted to ride out the storm
The fallout from the credit crunch has affected both London and New York, its nearest rival, according to the Global Financial Centres Index, a twice-yearly ranking commissioned by the City of London. The latest survey found that both cities had lost ground since February due to the crises and the big job losses in the financial services sector. This has cut into their lead over rivals, particularly in Asia and the Middle East, with the gap between New York and the third-placed city the smallest on record.

Since last autumn, New York has performed consistently better than London on regulatory criteria, according to the survey, although London retained its superior ranking overall. The latest index, covering 59 cities, saw Singapore overtake Hong Kong to claim third place, followed by Zurich, Geneva and Tokyo, which climbed two places to seventh. The biggest losers included Frankfurt, which fell three places to ninth, and Paris, down six places to 20th. The latest surveys were conducted in July, and so did not take account of the autumn’s worldwide banking turmoil.

However, Andrew Cahn, chief executive of UK Trade & Investment (UKTI), echoed Gordon Brown when he said that London would remain one of the world’s top financial centres. He said he was confident of the City’s ability to perform well in the credit crunch, but added that there would be changes in the way that financial services were promoted by the UK. Nevertheless, he suggested, increased regulation would not deter investment. “You always have, in times of trouble, a flight to safety and quality and that’s what London offers,” he said. “I’m confident that out of this turbulence and difficulty London will emerge stronger than ever.”

In a boost for the UK’s battered financial sector, the annual report of the British Private Equity and Venture Capital Association (BVCA) has highlighted some of its achievements. In the report, BVCA chief executive Simon Walker noted that Britain’s total investment for 2007 reached $50.6 billion. Of this, some $19.2 billion was spent in the UK, while $22.4 billion went to Europe and $9 billion to the rest of the world. Performance measurement research carried out by the BVCA found that the UK private equity industry achieved ten-year returns of 20.1 per cent in 2008, compared with 6.2 per cent recorded for the FTSE All-Share index. “London is the most established centre for the European private equity and venture capital industry. Globally, it holds second place behind the USA,” said Walker.

The BVCA report also showed that the organisation’s members invest in around 1,300 UK firms each year, while investment in research and development from private equity-backed companies has increased by 14 per cent per year, which is above the national average. Earlier this year, the Worldwide Centres of Commerce Index study, carried out by MasterCard, concluded that London was the most influential city globally, pointing out its strong economy, secure legal framework and successful financial markets.


UK remains top in Europe as 2007 FDI reaches new record
The UK remained the leading destination for inward investment in Europe in 2007, attracting over $1 trillion, according to the World Investment Report 2008 from the United Nations Conference on Trade and Development (UNCTAD). In the course of the year, the UK attracted and retained $1,347 billion of foreign direct investment (FDI) stock, an increase on the 2006 figure of $1,133 billion and a new record. The flow of inward FDI into the UK was $223 billion, up from $148 billion in 2006. Much of this was due to merger and acquisitions activity in the first two quarters.

UNCTAD’s annual review of investment trends showed that, globally, the UK was second only to the US, which attracted $1,789 billion, including $233 billion of inward flows. In Europe, France was in second place with $1,026 billion of total FDI and $158 billion of inflows, which put it in third place overall. Fourth was Canada, with $109 billion, and fifth the Netherlands ($99 billion). China was in sixth place ($84 billion), followed by Hong Kong ($60 billion). Russia came ninth ($52 billion), Brazil 14th ($35 billion) and India 20th ($23 billion).

The report put global FDI inflows for 2007 at $1,833 billion, a year-on-year increase of 30 per cent. This surpassed the previous record set in 2000 by some $400 billion, despite the global financial and credit crises, which began in the second half of 2007. The stock of FDI worldwide reached $15 trillion, representing the activities of some 79,000 transnational corporations (TNCs) worldwide, with about 790,000 foreign affiliates. The upward trend was apparent in nearly all regions and sub-regions of the world, in developed countries, developing countries and the transition economies of South-East Europe and the Commonwealth of Independent States (CIS).

FDI inflows to developed countries amounted to $1,248 billion. FDI inflows to developing countries reached their highest level ever, at $500 billion, a 21 per cent increase over 2006. Latin America and the Caribbean recorded the biggest increase, of 36 per cent. FDI outflows from developed countries grew even faster than their inflows, exceeding them by $445 billion, according to UNCTAD. The US maintained its position as the largest single source country for FDI in 2007. Among developing and transition economies, the three largest sources of FDI were China, Hong Kong and the Russian Federation.

Unprecedented levels of cross-border mergers and acquisitions (M&As), reflecting a continuing trend in consolidation of companies, contributed substantially to the global surge in FDI. The value of such transactions amounted to $1,637 billion, 21 per cent higher than the previous record set in 2000. Cross-border M&As involving private equity funds almost doubled, to $461 billion, and accounted for more than a quarter of the value of such transactions worldwide. A new feature of global FDI was the emergence of sovereign wealth funds (SWFs) as direct investors, contributing $10 billion.

However, the worldwide slowdown probably means that FDI has peaked and will be lower for 2008, according to the Geneva-based organisation. The financial turmoil in the world economy has led to liquidity crises in money and debt markets in many developed countries and, as a result, M&A activity has already begun to slow markedly. In the first half of 2008, the value of M&A transactions was 29 per cent lower than in the second half of 2007. UNCTAD estimated that, overall, FDI flows in 2008 would be about $1,600 billion, representing a 10 per cent decline from 2007. This was based on available data for 75 countries relating to FDI flows for the first quarter of 2008. FDI flows to developing countries were likely to remain fairly stable, however, it predicted.

UK remains top in Europe as 2007 FDI reaches new record
The UK remained the leading destination for inward investment in Europe in 2007, attracting over $1 trillion, according to the World Investment Report 2008 from the United Nations Conference on Trade and Development (UNCTAD). In the course of the year, the UK attracted and retained $1,347 billion of foreign direct investment (FDI) stock, an increase on the 2006 figure of $1,133 billion and a new record. The flow of inward FDI into the UK was $223 billion, up from $148 billion in 2006. Much of this was due to merger and acquisitions activity in the first two quarters.

UNCTAD’s annual review of investment trends showed that, globally, the UK was second only to the US, which attracted $1,789 billion, including $233 billion of inward flows. In Europe, France was in second place with $1,026 billion of total FDI and $158 billion of inflows, which put it in third place overall. Fourth was Canada, with $109 billion, and fifth the Netherlands ($99 billion). China was in sixth place ($84 billion), followed by Hong Kong ($60 billion). Russia came ninth ($52 billion), Brazil 14th ($35 billion) and India 20th ($23 billion).

The report put global FDI inflows for 2007 at $1,833 billion, a year-on-year increase of 30 per cent. This surpassed the previous record set in 2000 by some $400 billion, despite the global financial and credit crises, which began in the second half of 2007. The stock of FDI worldwide reached $15 trillion, representing the activities of some 79,000 transnational corporations (TNCs) worldwide, with about 790,000 foreign affiliates. The upward trend was apparent in nearly all regions and sub-regions of the world, in developed countries, developing countries and the transition economies of South-East Europe and the Commonwealth of Independent States (CIS).

FDI inflows to developed countries amounted to $1,248 billion. FDI inflows to developing countries reached their highest level ever, at $500 billion, a 21 per cent increase over 2006. Latin America and the Caribbean recorded the biggest increase, of 36 per cent. FDI outflows from developed countries grew even faster than their inflows, exceeding them by $445 billion, according to UNCTAD. The US maintained its position as the largest single source country for FDI in 2007. Among developing and transition economies, the three largest sources of FDI were China, Hong Kong and the Russian Federation.

Unprecedented levels of cross-border mergers and acquisitions (M&As), reflecting a continuing trend in consolidation of companies, contributed substantially to the global surge in FDI. The value of such transactions amounted to $1,637 billion, 21 per cent higher than the previous record set in 2000. Cross-border M&As involving private equity funds almost doubled, to $461 billion, and accounted for more than a quarter of the value of such transactions worldwide. A new feature of global FDI was the emergence of sovereign wealth funds (SWFs) as direct investors, contributing $10 billion.

However, the worldwide slowdown probably means that FDI has peaked and will be lower for 2008, according to the Geneva-based organisation. The financial turmoil in the world economy has led to liquidity crises in money and debt markets in many developed countries and, as a result, M&A activity has already begun to slow markedly. In the first half of 2008, the value of M&A transactions was 29 per cent lower than in the second half of 2007. UNCTAD estimated that, overall, FDI flows in 2008 would be about $1,600 billion, representing a 10 per cent decline from 2007. This was based on available data for 75 countries relating to FDI flows for the first quarter of 2008. FDI flows to developing countries were likely to remain fairly stable, however, it predicted.


London is once again named top European city for business
The 19th annual European Cities Monitor report from real estate consultant Cushman & Wakefield has once again ranked London the top European city in which to locate a business – for the 19th consecutive year. The UK capital was judged to be the number one choice in half of the 12 major areas surveyed, including access to markets, the availability of qualified staff, and international and internal transport links. It scored less well, however, on the cost of staff, the cost of office space and levels of pollution.

The annual report was based on interviews with senior managers and board directors in charge of location for 500 of Europe’s largest companies. In addition to the overall ranking, 34 cities were ranked against a number of criteria such as transport links, telecommunications, access to markets, availability and quality of staff, cost of office space and quality of life.

As in previous years, London was followed in the overall ranking by Paris and Frankfurt, in second and third places respectively. Brussels climbed to fourth this year from sixth, above Barcelona and Amsterdam. The biggest gainers included Zurich (up to 10th from 13th), Dusseldorf (up to 12th from 16th) and Manchester (up to 14th from 18th). Barcelona was named as the city with the best quality of life, while Moscow was highlighted as the location that can expect the biggest influx of companies over the next five years. Leeds, in the north of England, was judged to offer the best value for money on office space.

James Young, City of London office head at Cushman & Wakefield, said: “London is fortunate to be situated geographically between the economic powerhouses of the Far East and the United States. It is a truly international city which, although driven by the banking and financial services sector, is also a European media and creative hub.”

When asked about the key factors in deciding where to relocate their business, companies ranked the availability of qualified staff ahead of easy access to markets, customers or clients as the single most important factor, with telecommunications marginally ahead of national and international transport links. They also said that fears over the performance of the European economy, followed by the growth of central and eastern Europe, were the factors most likely to impact their business over the next ten years. More than a fifth of companies had outsourced operations overseas in the past 12 months, with the new EU member states the most popular destination, closely followed by India.

This year companies were also asked whether they occupied an environmentally friendly or ‘green’ building. Only 15 per cent of companies currently do so, though 45 per cent said they would like to do so. However, 32 per cent had no interest in occupying a green building. The expected reduction in energy and water consumption was considered the most attractive factor for 35 per cent of companies. Nineteen per cent of respondents claimed that the biggest barrier to occupying a green building was insufficient choice.


Regional cities jostle in race to attract investors
In Cushman & Wakefield’s parallel UK Cities Monitor report, London, Manchester and Birmingham retained their position as the UK’s most business-friendly cities. Leeds improved its position to rank as the country’s fourth most favoured city, while Bristol slipped to number five. Glasgow was sixth, followed by Edinburgh, Newcastle, Cardiff, Sheffield, Liverpool, Nottingham, Southampton, Belfast and Reading.

The survey quizzed senior company executives on their perception of 21 factors, such as transport links, staff resources, office accommodation and quality of life, in 15 of the country’s largest cities. Unsurprisingly, London came first for many of these, but Manchester, Birmingham and Edinburgh were among a number of cities which ranked higher than the capital in others. Manchester in particular performed well, with executives ranking the city as their preferred choice both as a new headquarters location and as a new back office function. It was also ranked first as the city doing the most to improve itself and the city doing the most to promote itself.

Newcastle was considered to be the best UK location for a call centre and was also ranked first as the city offering the lowest cost of staff. Edinburgh moved up one place in the overall ranking to number seven, and was considered the best location for quality of life, while also having the greenest reputation.

UK Cities Monitor also surveyed companies on the factors they regarded as important when deciding where to locate their business. Easy access to markets, customers or clients was considered the most important factor by 50 per cent of those surveyed, followed by value for money of office space and the ease of recruiting staff. Among other findings, transport issues dominated companies’ thinking when suggesting how their current city locations could be improved. Improving shopping and leisure facilities and improving the supply of office space were also highly ranked.

Elaine Rossall, head of European business space research at Cushman & Wakefield, said: “London is now essentially one of a small number of ‘world cities’. Its sheer size and position as a global financial centre mean that it is always going to be the most recognised and successful business location in the UK. What is interesting therefore is to see which cities are jostling for position below it. Most of the cities in our ranking compete with each other to attract businesses from overseas and relocations of existing UK companies. They are increasingly recognising the need to promote their competitive advantages and to understand the complex ingredients of success to ensure that their location remains competitive. The rise of cities such as Edinburgh, Leeds and Sheffield demonstrates that ‘softer’ factors such as quality of life are deemed increasingly important.”

French investment secures future of UK nuclear power industry
BFrench energy company EDF made a $20 billion takeover offer for British Energy Group plc in late September, and the UK Government committed to accepting its cash offer for its 36 per cent stake held by the Nuclear Liabilities Fund (NLF). British Energy is the UK’s largest electricity generator, employing over 6,000 people, and owns and operates eight nuclear power stations around the country. Prime Minister Gordon Brown said: “This deal is good value for the taxpayer and a significant step towards the construction of a new generation of nuclear stations to power the country. Nuclear is clean, secure and affordable; its expansion is crucial for Britain’s long-term energy security, as we reduce our oil dependence and move towards a low-carbon future.”

Dungeness B nuclear power station, Essex. Picture courtesy of David Hay Jones / Science Photo Library

The acquisition is one of the biggest foreign direct investments ever made in Britain and, according to then Business Secretary John Hutton, it demonstrated the attractiveness of the UK market to the private sector. As well as continuing to operate British Energy’s existing nuclear power stations, EDF is proposing a further substantial investment to build four new reactors with a total generating capacity of 6.4GW of electricity. It wants to construct and operate two of its European pressurised reactors, designed by Areva of France, at Hinkley Point in Somerset, South West England and another two at Sizewell in Suffolk, Eastern England. Under its plans, the first new reactor could come on-stream by the end of 2017.

The four new reactors would generate enough ‘clean’ electricity to meet more than 13 per cent of forecast UK electricity demand by the early 2020s and would equate to a saving of more than 14 million tonnes of CO2 emissions a year, according to the Government. EDF has been established in the UK for ten years and already employs 13,000 people in its subsidiary EDF Energy; the new investment promises to create significant new employment opportunities.

Under the terms of the deal, the company has also agreed to sell land at up to four other sites – Dungeness in Kent, Heysham in Lancashire, Bradwell in Essex and Wylfa on Anglesey – to other potential nuclear operators, with RWE and Eon of Germany, Vattenfall of Sweden and Iberdrola of Spain though to be among the potential bidders. EDF also said that talks were “very advanced” with Centrica, the owner of British Gas, about taking a 25 per cent stake in the new holding company for British Energy, once the acquisition is completed.


UK a ‘hotbed’ for low-carbon technology investment
The UK is the European hotbed of investment and innovation in low-carbon technologies, attracting 41 per cent of all venture capital and private equity investment in low-carbon companies in the EU, according to a new report. The study, The Race to Capture the Carbon Pound: The UK’s place in the global market for low carbon innovation, was conducted by consultancy Vivid Economics in collaboration with New Energy Finance, and was the third in a series commissioned by Shell Springboard. It investigates the role of small and medium enterprises (SMEs) in tackling climate change and the extent to which the UK is harnessing this global opportunity.

The research revealed that the global low-carbon energy market could reach a potential value of $3,600 billion per annum by 2030 – comparable to that of commodities such as wheat and steel today – if the world acts to stem climate change. 2007 was a record year for investment in sustainable energy, with global investment growing from $80 billion in 2006 to $118.4 billion. UK companies attracted over $1.6 billion of venture capital and private equity finance, more than twice as much as any other European country. SMEs in particular attracted a large share (43 per cent, equating to $512 million) of the $1.2 billion invested in European low-carbon SMEs from 2006 to the first quarter of 2008.

Climate change entrepreneurship could be a bigger, more enduring opportunity than the dot.com boom of the late 1990s, when global sales of personal computers were growing at 15–20 per cent, claimed the report. It was released to coincide with the closing date for the Shell Springboard awards, which provide a financial boost to innovative, low-carbon business ideas. Last year, awards of $64,000 were made to eight businesses from across the UK, including Carbon8 Systems Ltd, a business in Kent, South East England that turns everyday rubbish from landfill sites into building materials such as bricks or roofing.
 

Goldfield said it was essential for the port to press ahead with its plans to accommodate growing growth volumes. It is currently progressing proposals for a $672 million expansion programme, which includes development of a second ferry terminal with four ferry berths within the harbour. The proposals are currently the subject of an environmental impact study, which is due for completion by the end of the year. The port anticipates beginning the formal planning consent process early in 2009.

Earlier this year, Dover announced that 40,000 extra freight movements through the port had pushed traffic to a new record high of 2,363,583 journeys in 2007. Many motoring tourists returned to ferries during 2007, said the port, as continued consolidation of low-cost airlines and increasing airport taxes and delays reduced the appeal of short-haul flights in favour of drive-and-sail holidays. The number of tourist car journeys last year was up 7.2 per cent to more than 2.8 million, the highest since 1999.

Technology sectors driven by innovation and creativity
A new report shows that the UK space and satellite telecommunications sector has almost doubled its turnover in the past seven years. The Size and Health of the UK Space Industry 2008 report says that the industry is also showing signs of a successful future, after seeing growth of almost 8 per cent in 2006/07 and achieving a turnover of $9.3 billion. In addition, the research shows that the UK space industry employs nearly 19,000 people, with over 5,800 of these being among the most highly-skilled in the country: 60 per cent of employees in the sector hold a first degree and one-third of these possess a second degree.

Science and Innovation Minister Ian Pearson highlighted the contribution made by the space industry, pointing to digital TV, global monitoring telephony and internet traffic as innovations that rely on it. One of the achievements noted by the minister was the Alphasat telecommunications satellite, which features an advanced payload and antenna system developed by the UK arm of Astrium, Europe’s largest space company. According to the British National Space Centre, this will help pioneer new telephone, broadcast and multicast services. Pearson remarked: “The UK should be proud of its world-leading capabilities in telecommunications and small satellites. It will play a significant part in driving forward the UK’s future knowledge economy.”
 

Stage One of the new Phase 4 development at Tamar Science Park – the only science park in Devon, South East England – is now open for business. The development, costing $18.4 million, has been funded by the Park together with grants from the South West RDA and EU Objective 2 funding. The project has been designed to minimise its impact on the environment, incorporating green technologies such as rainwater harvesting and a sustainable drainage system. Its four new buildings will provide Tamar Science Park with an additional 33,000 sq ft of accommodation, of which 24,000 sq ft will be space for new occupiers in units varying in size from 86 sq ft to 1,808 sq ft. It also incorporates a data centre, pre-incubation space and a restaurant. Later stages of the Phase 4 project will double the Park’s size in terms of available space, providing an extra 89,100 sq ft. Clients will benefit from business support including pre-incubation, technology transfer, design, rapid prototyping, laboratories and research areas.

In the East Midlands, BioCity Nottingham, the UK’s fastest growing bioscience incubator, has passed another landmark with the opening of the new Laurus Building, which provides 48,000 sq ft of grow-on office and laboratory facilities for companies seeking to expand. Demand for accommodation in the five-storey building has been strong, with a number of tenants already signed up. “The companies at BioCity are thriving and growing fast,” said BioCity chief executive Dr Glenn Crocker, who has overseen the rapid development of the site since its launch in 2002. “To keep pace with demand we are opening the Laurus Building ahead of schedule and will need to develop further on open land around the campus in the coming years.”

The new facility is a collaborative venture between Nottingham Trent University, the University of Nottingham, the East Midlands Development Agency (emda), BioCity Nottingham and the European Regional Development Fund (ERDF). Steve Brown, deputy chairman of emda, said: “BioCity is an invaluable asset for the healthcare and bioscience sector in our region. The East Midlands, and Nottingham in particular, are building an outstanding international reputation as a centre of excellence in this field, and BioCity is at the very heart of this.”
 

John McNeish, an executive director in global R&D at the company, who will run the US unit, said that the overall operation – including Cambridge, UK – would eventually have 50–60 scientists working on stem cell therapies. They will be collaborating with academic researchers and smaller biotech companies in the East of England bio cluster. Pfizer has already agreed a number of small collaborations and hopes to announce several more over the next few months.

The company also remains committed to its research and development programme at Sandwich, South East England, which is one of its four key global R&D sites. The 390-acre site has 2.2 million sq ft of facility space, and is the largest pharmaceutical research centre outside the US affiliated with a US company. It has more than 2,700 scientists and 900 manufacturing staff, and is Pfizer’s key discovery and development site in the areas of allergy and respiratory, genitory-urinary, pain, vaccines, gastrointestinal and hepatology, and anti-retrovirals. One of its main functions is Discovery High Throughput Screening, an advanced process that provides research scientists with a wide range of target compounds to pursue.

Another leading company, MedImmune, has announced the opening of a new biologics R&D facility in Cambridge. The Aaron Klug Building, named after the 1982 Nobel prize winner for chemistry, represents a major expansion of MedImmune’s existing Granta Park site, and provides additional laboratory space for its growing scientific staff in the city. MedImmune was acquired by AstraZeneca in June 2007 and, as the pharmaceutical giant’s global biologics unit, plays a significant role in its strategic growth plans, aiming to deliver an average of one new biologic product per year from 2013. The new facility is crucial to supporting this aim, and will provide MedImmune with capacity to significantly increase the number of candidate drugs it can develop each year.

The Japanese government has located a new research satellite at the University of Cambridge Department of Engineering’s Nanoscience Centre, as part of a unique collaborative agreement. Cambridge is one of four institutes located outside Japan that will host a satellite of the International Center for Materials Nanoarchitectonics (MANA). MANA is expected to create world-class research centres under the supervision of a number of top scientists from Japan’s National Institute for Materials Science (NIMS). The 10-year, $150m programme is aimed at developing innovative materials that contribute to sustainable development – realising a major shift in materials research. The Cambridge University satellite will be led jointly by Professor Mark Welland, who heads the Nanoscience Group in the Electrical Engineering Division of Cambridge’s Engineering Department, and Dr David Bowler from the London Centre for Nanotechnology and Department of Physics & Astronomy, University College London (UCL).

Elsewhere in the region, a $464,000 grant from the East of England Development Agency (EEDA)’s Lifesciences and Healthcare Capital Equipment Competition will help the University of Bedfordshire to offer a fully-tailored suite of ‘drop-in’ labs at Luton’s Butterfield Business Park. The investment will provide Luton’s Institute of Research in the Applied Natural Sciences (LIRANS) with the latest confocal laser microscope technology, which will allow both students and businesses to road-test their ideas. It is also hoped the new services will help forge stronger links between the region’s academia and enterprise. According to David Rawson, professor of applied cell biology at LIRANS, the grant will be “absolutely critical” in helping it cater to the needs of the bioscience sector. He said: “Businesses in the region can tap in to a wealth of facilities without having to tie in their early-stage capital in outsourcing.”

UK universities maintain world-class status
Universities in the UK and the US again dominated this year’s annual Times Higher Education QS rankings of the world’s best higher education institutions. Among the top 10 institutions in this year’s list, the fifth to be compiled, four were in the UK and six in the US. Harvard retained its top spot, followed by Yale, which this year edged past Cambridge and Oxford, in third and fourth positions respectively. Imperial College London was in sixth place (fifth last year), while University College London rose from ninth to seventh place. California Institute of Technology took fifth spot, with the top ten rounded out by the University of Chicago, MIT and Columbia University.

Of the top 100 institutions worldwide, 17 were from the UK, two fewer than in 2007, while the US had 37 universities on the list. More than 6,300 academics and 2,300 employers took part in the surveys used to compile the rankings. The editor of Times Higher Education, Ann Mroz, said: “UK universities are very clearly among the world’s best and have maintained good positions in the rankings this year. … However, Harvard alone has an endowment that is about the same size as the total annual income for the whole of the UK university sector.”

Technology-based universities featured more strongly than in previous years. Thirteen institutions in the top 100 had a strong technology bias, and institutions such as Caltech, MIT, ETH Zurich and Hong Kong University of Science and Technology improved their positions. Such institutions scored particularly well in the survey of employers, who seem to appreciate graduates with numerical and problem-solving skills.

Higher Education Minister David Lammy said that the table was further evidence that the UK’s higher education system was world-class. “But we are not complacent. Excellence today is no guarantee of excellence in 10–15 years’ time,” he said. He added that, by 2011, funding for UK universities would increase by 30% in real terms since 1997, to $17.6 billion a year.

Meanwhile Loughborough University, located in the East Midlands, has won the prestigious University of the Year title in this year’s Sunday Times University Guide. The Guide profiles all the UK’s higher education institutions and ranks them according to nine different criteria, such as student satisfaction, teaching and research quality, degree results achieved and graduate employment levels. Loughborough was ranked 11th in this year’s overall league table, its highest ever rating.

The University of the Year accolade is designed to recognise all-round excellence. It was awarded to Loughborough in honour of the quality of its teaching and research, its consistently high rankings in the National Student Survey and its outstanding success in sport. The award caps a particularly successful period for the university. At the end of 2007, it was presented with two Times Higher Awards, for the Best Student Experience and Outstanding Support for Overseas Students. In February it was presented with its sixth Queen’s Anniversary Prize for Higher and Further Education, in recognition of its vehicle, road and driver safety research – an achievement unbeaten by any other institution.

In national newspaper league tables, Loughborough has consistently been rated among the top fifteen UK universities, and the 2008 National Student Survey ranked it fourth in the UK. It consistently scores highly for environmental activity, and won a First Class degree for its solid environmental performance in the People and Planet Green League 2008. It has been chosen by the Government to host a new $1.6 billion national energy institute, and is drawing up a business plan for a Science and Enterprise Park.

Other recent developments include a $24 million Sports Technology Institute. This summer, Loughborough saw its largest ever contingent of athletes compete at an Olympics and Paralympic Games, with 56 students, university-based athletes and graduates in action in Beijing. They competed in 25 finals, broke two European and 15 British records and picked up a total of three medals.


Scarborough crowned champion of Enterprising Britain
The North Yorkshire town of Scarborough has been named the enterprise capital of the UK, beating stiff competition in this year’s Enterprising Britain competition. The Scarborough Renaissance Partnership was recognised for its Waking Sleeping Beauty project, which has transformed the declining seaside town.

In 2002 unemployment in Scarborough was twice the North Yorkshire average. More than a third of residents lived in neighbourhoods that ranked among the 20 per cent most deprived in the country and seasonal unemployment reached 20 per cent in the winter months. Local businesses and residents, supported by the council and the Yorkshire Forward RDA, united to form the Scarborough Renaissance Partnership, aiming to halt the spiral of decline. The Partnership’s achievements in the past six years have included seasonal unemployment being stamped out, new industry sectors being developed and an influx of more than $360 million of private sector investment, bringing hundreds of new jobs.

The Partnership’s strategy focused on diversifying the economy, moving away from a dependence on the town’s declining tourism and fishing industries. Existing businesses have capitalised on the physical regeneration of the harbourside, while there has been a boom in start-ups. Wi-fi communications have been introduced and the development of sectors such as surfboard manufacturing has resulted in a much more creative, cultural feel to the town.

Businessman Peter Jones, of the popular BBC TV series Dragon’s Den and a judge for Enterprising Britain, said: “Scarborough’s story is really compelling and the visible impact of renaissance clear – the creation and growth of a thriving creative and digital industry, where one previously did not, and could not have, existed is a huge achievement. This sector now accounts for 19 per cent of Scarborough’s economy, having taken over from tourism.”

Enterprising Britain 2008 is a national competition that celebrates the most enterprising places in the UK. Run by the Make Your Mark campaign on behalf of the Department for Business Enterprise and Regulatory Reform, it is a key part of the Government’s drive to encourage entrepreneurship. It identifies areas of enterprise excellence that have created jobs, forged links in communities and improved the local climate for businesses and residents.

Twelve finalists, one from each of the Regional Development Agencies and Devolved Administrations, were shortlisted for the competition final in June and visited by judges over the summer. Herefordshire Council received the Enterprising Britain 2008 runner-up award for the way it has brought about sustainable prosperity in the county, while Furness Enterprise was highly commended for its focus on supporting social enterprise in the rural North West. Minister for Competitiveness and Small Business, Shriti Vadera, said: “Enterprise remains the backbone of our economy, with 4.7 million businesses last year contributing more than 50 per cent to the UK’s turnover.”


West Midlands manufacturer named Best Factory 2008
A small West Midlands business that designs and manufactures bespoke electrical and electronic assemblies for a diverse range of industrial markets has been named Barclays Factory of the Year for 2008 in the Best Factory Awards (BFA), run by the Cranfield School of Management, one of Europe’s leading university management schools. Power Panels Electrical Systems Ltd, based in Walsall, also scooped the Best Electronics & Electrical Plant, the Skills Development Award and the Best Small Company Award. It employs 180 people at its Walsall site and this year its sales have grown by over 20 per cent.

The Best Factory Awards, run by Cranfield in partnership with the magazine Works Management, bring together the best manufacturers to share best practice and to celebrate their achievements. The awards recognise UK manufacturing excellence, particularly companies with pioneering work practices. Among this year’s winners were several foreign-invested companies. French-owned Saint Gobain Glass UK, based in Eggborough in the East Riding of Yorkshire, won the award for Best Process Plant, and was also highly commended in the Skills Development and Energy & Environment categories. The plant manufactures flat glass for the construction industry, including float, coated and laminated glass products. Highly commended in the Best Process Plant category was Kodak Ltd GCG of Watford, Hertfordshire.

The Best Engineering Plant was Gates Power Transmission of Dumfries in Scotland, which manufactures synchronous timing belts and components for the automotive and industrial markets. Yamazaki Mazak UK Ltd, Worcester was highly commended. The Supply Chain Award was taken by Plexus Corp (UK) Limited of Kelso, which manufactures complex, high-tech products for a variety of markets including wireless infrastructure, medical, industrial and aerospace. Gates Power Transmission was also highly commended in this section, as was Plexus in the innovation category. The Most Improved Plant was Merck Sharp & Dohme Ltd of Cramlington, Northumberland, which manufactures a wide range of innovative pharmaceutical products. The company also claimed the Health & Safety Award.

In all, the Thames Gateway programme has more than 30 areas of investment. It includes setting up a new joint inward investment service to coordinate activities, and also aims to develop the region’s environmental research and innovation capacity through a Thames Gateway Institute for Sustainability. Eco sites will include a Sustainable Industries Park at Dagenham Dock, focusing on sustainable construction, renewable energy and waste recycling; an R&D centre for resource management for low-impact buildings and communities in Dartford, Kent; and a Bio-Renewable Energy Research Park in South Essex, which will investigate bio-energy technologies for electricity, heat and transport fuel.

Texas-based HC&B Healthcare Communications, one of the US’s top 25 independent healthcare marketing firms, has opened a UK office as part of its global expansion strategy. The office, located in the landmark Centre Point office building in London’s West End, will handle HC&B’s global accounts and international business development. Michael Dumigan, managing director at the London base, said the move was to enable the company to operate on a truly international scale. He added: “We’ve put a top-grade team in place in London and we are already working closely with our counterparts in the US to deliver global solutions for a growing number of global healthcare brands.” HC&B works across a range of sectors, including medical devices, pharmaceuticals and biotechnology, promoting the products and research of industry players.

RiskMetrics Group Incorporated of the US has purchased Applied4 Technology, a software business based in Leeds, Yorkshire and Humber. RiskMetrics, which is quoted on the New York Stock Exchange, provides services to companies in global financial markets, while Applied4 Technology supplies solutions for investment performance measurement. Stephen Frazer, of Manchester-based professional advisers RSM Bentley Jennison, who advised on the deal, commented: “In times of financial turmoil it is great to see there are still business opportunities with the USA, but the fit has to be right.” Among the firm’s main products is Alto, a performance measurement platform that focuses on issues such as data management.

Confectionery company Nestlé has opened a new co-packing factory in York, Yorkshire and Humber, creating over 100 jobs. Positions at the site will be both permanent and contracted, and follow the creation of 50 new jobs in York earlier this year. The company also estimates that the move could see the number of lorry loads needed for transportation reduced by 4,000 a year. Paul Grimwood, managing director of Nestlé, said that it made sense for the company to make the move to York, which hosts one of the company’s largest distribution centres.

A pioneering Australian recycling company is to invest $19.2 million in a new plastic bottle recycling plant on Deeside in North Wales. Closed Loop Recycling is the first company in the UK capable of recycling waste plastic bottles back into food packaging material. The company opened its first plant in London in June and the second, near Chester, will create up to 50 jobs. The project is backed by private equity investment and by around $1.6 million in public sector funding from the Welsh Assembly Government. The facility will take 50,000 tonnes of water, milk and other soft drinks bottles each year and turn them into recycled raw material for new food and drink packaging. Managing director Chris Dow said the plant would enable an increase in plastic recycling rates in North Wales and North West England. “This new venture is further evidence the UK is undergoing a recycling revolution. The industry is beginning to view recycled plastic in a new light. It’s no longer waste. It’s becoming a valuable resource,” he remarked.

IBM is to invest $3.6 million to establish a new collocation data centre in Scotland. The centre will be built at the international technology giant’s facility in Greenock and will provide IT services to mid-sized businesses. It will be constructed to green standards, using cooling and power management technologies that take advantage of local climatic conditions. IBM has had a presence in the Inverclyde region of Scotland for 57 years and, according to Alex Reardon, the company’s director of general business sector UK and Ireland, the skilled and flexible workforce based there provides support to its international growth strategy.

A new research initiative has been launched in Scottish universities to help develop the local chemicals industry. Chemical Sciences Scotland (CSS) and the Scottish Funding Council (SFC) have created 31 new PhD studentships in chemistry as part of the ScotCHEM programme, according to Scottish Enterprise. The students will examine Scotland’s $5.6 billion chemical industry to identify future opportunities and challenges, with the programme forging links between universities and the chemicals industry. A total of $5.8 million will be invested over three years by the SFC and the universities of Strathclyde, Glasgow, Heriot-Watt, Edinburgh, St Andrews, Dundee and Aberdeen. According to CSS, the Scottish chemicals industry is the country’s second biggest export earner, with shipping revenues of around $2.9 billion, and it accounts for 10.5 per cent of Scottish manufacturing turnover.

North American telecommunications company BTI Systems – headquartered in Ottawa and with regional offices in Boston and Dallas – is to establish a $9.6 million European headquarters and software centre of excellence in Belfast, Northern Ireland, in an investment supported by Invest Northern Ireland. The company, a global supplier of Intelligent Service Edge solutions, will invest $10.7 million in the region, creating 60 high-quality jobs over the next three years. Such solutions include the development of systems for the delivery of high-bandwidth voice, video and data communications. Gregory Koss, chairman and CEO of BTI Systems, said “Northern Ireland offers many advantages as a regional hub. BTI plans to leverage the local talent pool to grow the company’s software development efforts, expand its global footprint and continue to deliver best-in-class technologies and solutions to the European marketplace.”

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