April 2010

NEWS

Darling’s Budget offers encouragement for small businesses
Chancellor Alistair Darling unveiled the last Budget of the current Parliament on 24 March, before the General Election, which is widely expected to take place in May. “This will be a Budget to secure the recovery, tackle borrowing and invest in our industrial future,” was how he described it. With current economic debate dominated by questions of when to cut spending and by how much, Mr Darling avoided introducing significant spending cuts this year, though he promised more drastic action for the years after 2011. “I believe that to start cutting now risks derailing the recovery,” he said.

Mr Darling said that government borrowing would be slightly less than he had earlier predicted, at $250.5 billion for this year, $16.5 billion lower than previous estimates. The figure would be $244.5 billion in 2011, $196.5 billion in 2011/2012 and $165 billion in 2013/14, before reaching $111 billion in 2014/15, he said. Acknowledging that the economy had contracted by 6 per cent over the course of the recession, he predicted that growth for 2010 would be between 1 per cent and 1.5 per cent, in line with forecasts. However, he revised his growth forecast for next year down to between 3 per cent and 3.5 per cent.

There were few new announcements, as most tax measures had been set out in the pre-Budget Report late last year. However, the Chancellor raised the stamp duty (purchase tax) threshold for first-time buyers to $375,000, to be funded by an increase to 5 per cent of the levy on homes worth $1.5 million. There were also a number of new measures designed to help small businesses. Business rates will be cut from October for one year, effectively scrapping bills for 345,000 firms for that period, while the annual investment allowance will double to $150,000.

Entrepreneurs will benefit from a raising of the threshold for relief on capital gains tax, from the first $1.5 million of gains made over a lifetime to $3 million, from April 2010. The main rate of Capital Gains Tax will remain unchanged. A scheduled fuel duty increase is to be staggered, with a penny rise in April and October and the remainder in January 2011, and there will be a reduction in tax on very low-carbon company cars. Nevertheless, National Insurance contributions (NICs) for both employers and workers earning more than $30,000 per annum will still rise by 1 per cent from April 2011. A top rate of income tax at 50 per cent for people earning $225,000 or more was confirmed for April 2010, along with the gradual removal of personal allowances for those earning over $150,000.

Mr Darling announced measures to boost funding for business. The partly state-owned banks (RBS and Lloyds) will be obliged to provide $157.5 billion of loans to homeowners and business, $61.5 billion of this to small firms. A new credit adjudicator will be established to fast-track complaints from small firms that believe they have been unfairly refused credit. Small businesses struggling to pay their taxes will have continued access to the Time to Pay scheme for the whole of the next Parliament. A new national investment corporation, UK Finance for Growth, will oversee the government’s $6 billion portfolio of business support funds. This will include a new growth capital fund worth $750 million to help fast-growing SMEs. In addition, 15 per cent more central government contracts will be awarded to SMEs.

A $52.5 million University Enterprise Capital Fund will be set up to strengthen links between university innovation and the commercial development of innovations by spin-off companies. There will be a one-off $405 million payment to universities to help provide 20,000 more places for students studying science, mathematics and engineering. An extra $126 million has been set aside for road repairs and $375 million for improvements to motorways under infrastructure spending plans. A Green Investment Bank with $3 billion in equity will be set up to focus on investing in green transport and sustainable energy, in particular offshore wind power. This will be partly funded from the sale of the government’s stake in the Channel Tunnel.

In other measures, Mr Darling claimed that additional tax avoidance measures would bring in $750 million in revenues. Public sector pay settlements will be held at a maximum of 1 per cent for two years from 2011, while Government departments will make $16.5 billion worth of efficiency savings. The Chancellor said that spending would increase in real terms by 2.2 per cent next year as already planned, but that the next spending settlement, from 2011 onwards, would be the “toughest for decades”.
 

London hosts Global Investment Conference
Some 250 world business leaders, academics and entrepreneurs gathered in London in February for the Global Investment Conference, organised by UK Trade & Investment (UKTI) and hosted by Prime Minister Gordon Brown. The gathering came less than 12 months after the world’s political leaders met in London for the G20 summit to discuss how to rescue the global economy. This time, Mr Brown said: “If 2009 was the year of global recession, then 2010 must be the year of global recovery. This is not about a partnership of governments or a partnership of international business, but a partnership of international business and government. It is about how together we can lock in the recovery and grasp the opportunities of the future.”

Business leaders attending the event – representing international companies such as Ford, Hitachi, Bombardier, China Merchants Bank, Burberry and Lockheed Martin – said that the UK offered a compelling case as an investment destination, given its critical mass of talent and innovation, its location as a stepping stone to Europe, its infrastructure and the breadth of services on offer. Investment from foreign companies has created or safeguarded over 800,000 jobs in the past decade in the UK. On average, over 30 companies invest each week, making it the leading country in Europe for attracting inward investment.

The Prime Minister said that the UK was committed to improving the business environment for investors by simplifying planning processes, developing new infrastructure and maintaining stable and clear regulation. Senior ministers used the conference to announce a number of new initiatives related to inward investment. These included the publication of a draft Tax Framework for Business and an Investors’ Charter, together with the introduction of new foreign internship schemes and a sponsor scheme by the UK Border Agency. They also announced fresh funding of $300 million from the UK Innovation Investment Fund (UKIIF) to benefit the life sciences, digital and advanced manufacturing sectors.

Lord Davies of Abersoch, Minister for Trade, Investment and Small Business, said: “The investment decisions of the world business leaders who have gathered in London today will play a vital role in the global economic recovery. We are here to listen, to learn and to act. By restoring flows of investment, and sparking innovation, we can promote economic growth and prosperity around the world.” Companies making investment announcements at the conference included Imperial College Business School, which is to collaborate with Microsoft; Malaysian-owned Tune Hotels; Indian financial services group Religare Enterprises Ltd; Ireland’s Mainstream Renewable Power; and Canada’s PharmaTrust.


International business leaders give their verdict on the UK
Business Secretary Lord Mandelson said at the Global Investment Conference: “The investors here today say that the UK is the best place in Europe to do business. In Europe, we have the biggest industries for life sciences, financial services, creative industries and ICT. We are also the number one choice for European headquarters. The UK Government is committed to building on these strengths.” His comments were backed up by positive feedback from business leaders in a range of different businesses and from a variety of national backgrounds.

For example, Weimin Gao, president of SAIC Motor Technical Centre and chairman of SAIC Motor UK Technical Centre, said: “The UK has always been a compelling place to invest, as it is at the forefront of automotive technologies and is a stepping stone into Europe.” Andrew Witty, CEO of GSK, remarked: “The UK’s strong science base is a powerful attraction to the life sciences sector which drives investment in R&D. … GSK has already pledged around [$750 million] of additional investment, equating to up to 1,000 new jobs in the UK over time.” James Dehlsen, chairman and founder of Clipper Windpower, pointed out: “The UK has a strong and rapidly developing an offshore wind industry.”

Laurent Beaudoin, chairman of Bombardier, said: “The UK has a culture of innovation with a highly-skilled and productive workforce,” while Stephen Ball, CEO of Lockheed Martin UK, commented: “The UK’s strong infrastructure and its highly skilled workforce make it an ideal place in which to invest. It is also ideally positioned to provide access to both the European and US markets.” David Kester, chief executive of the UK’s Design Council, said: “If you want to be at the global centre of ideas – at the meeting point of finance, technology, design and enterprise – then you choose the UK.” Rahul Garella, senior vice president of Glenmark Generics, remarked: “The longstanding two-way interaction between the UK and India is a crucial part of our success in Europe.”

Ryoichi Bamba, president and chief executive of Canon Europe, said of the UK capital: “A London location will … bring us closer to key players in the global business community.” Ma Weihua, president of China Merchants Bank, explained: “London’s long history as a financial centre and the many professional services available there pushed us toward the UK.” Xavier Rolet, CEO of the London Stock Exchange, stressed: “London remains, first and foremost, the most competitive financial and services capital in the world. Critical mass is very, very important. As a financial capital, London has got everything.” Sunil Godhwani, CEO and MD of Religare Enterprises Ltd, said: “In our quest to build an international brand, we knew that it was important to have a presence in the city considered to be one of the world’s greatest international financial hubs.”

Separately, Komatsu, the Japanese maker of construction and mining equipment and one of the UK’s leading inward investors, has expressed relief that the UK chose not to join the European single currency. Formerly a strong supporter of euro membership, the company has changed its mind on the benefits of the eurozone. Its chairman, Masahiro Sakane, said that the company’s plant in North East England would gain from the pound’s sharp fall against the euro when demand for its products started to recover.

Komatsu makes excavators for the European market, including France, Italy, Germany and Spain, at Birtley in Gateshead. Its market has shrunk by two-thirds since the construction and manufacturing industries were hit by the global financial crisis in 2008. Inward investors were among the strongest supporters of euro membership; now, however, Komatsu sees the benefits to overseas sales of the 25 per cent decline in the pound’s value against the euro over the past three years. Mr Sakane said: “The weaker sterling is a help, and particularly when the market recovers in the European area it will be good for us.” He expected Komatsu’s sales to start growing again from 2011-12.

New support pledged to build industries of the future
March marked the first anniversary of the Government’s introduction of its ‘New Industry, New Jobs’ strategy, which set out a new approach to active government investment driving economic growth. Under this approach, the Government set out plans to support private sector investment in the development of key new industries, especially in the infrastructure and skills they need to meet future challenges and take advantage of new opportunities. One year on, Business Secretary Lord Mandelson took stock of progress under the strategy, with a particular emphasis on skills. He remarked: “Over the next decade, Britain’s economy is going to need a new wave of private sector investment in long-term business creation and job creation. This is about making the economy ready for a decade of industrial and economic renewal in Britain. We will need new industrial strengths and we will need to reinforce our position as global leaders in innovative manufacturing and services.”

He was joined by the chief executive of the UK Commission for Employment and Skills (UKCES), Chris Humphries, who announced the publication of the first ever National Strategic Skills Audit. The report set out current trends and the skills that will be needed in the coming years to support businesses. It recommended focusing support on economically valuable skills in priority sectors; highlighted the need for more information for employers and government on where high-value job opportunities will be in future; and called for businesses to make more use of high-level skills. Mr Humphries said: “The National Strategic Skills Audit shows that there have been some substantial changes in the labour market over the past decade. In order to operate in this fast-changing environment we need comprehensive market intelligence, showing us which are the really key priorities for future investment.”

To help achieve these aims, ministers have announced a range of new initiatives. These include plans for a new National Composites Centre in Bristol, South West England, created with $24 million of funding from the Department for Business and the South West Regional Development Agency. More than 200 leading industry researchers and academic experts will be based at the centre. Two new Low Carbon Economic Areas have been announced, with London chosen to promote energy-efficient buildings and Yorkshire and the Humber becoming a Low Carbon Economic Area for Carbon Capture and Storage.

The Department for Business, Innovation and Skills (BIS) has announced the creation of a number of new National Skills Academies (NSAs), to join existing academies covering the construction, manufacturing, nuclear, enterprise, retail and IT sectors. NSAs are employer-led and funded skills organisations that work with Government and learning providers to develop and coordinate training programmes. The new academies bring the total of NSAs to 18, benefiting from a combined employer investment of more than $195 million.

A National Skills Academy for Power, based at Ratcliffe-on-Soar in Nottinghamshire, East Midlands, is ready for launch, with $4.4 million of investment from the government and $5.9 million in cash and in kind investment from EDF, E-On and other industry employers. NSAs will also be developed to cover five new sectors – rail engineering, logistics, green building services, biotechnology and composites – funded by $18 million of public investment matched by the private sector. In all, these academies will aim to attract more than 300,000 learners to the training programmes they oversee over the next four years.

The NSA for Rail Engineering will receive nearly $4.5 million of Government investment through the Skills Funding Agency and has the support of organisations including Network Rail, Transport for London, the Rail Industry Association and the Association of Train Operating Companies. The Learning and Skills Council (LSC) has also approved a Tunnelling and Underground Construction Academy, to be based in Ilford, London and to be run by Crossrail. This will receive $7.5 million of public funding and will provide training for up to 1,800 people a year.

The existing NSA for Process Industries will expand to create new academy hubs for biotechnology and composites, with over $3 million in public investment. Employers including Unipart, Denby Transport and the Port of Tilbury are supporting the logistics sector NSA, which will receive over $6 million in public funding. The NSA in the green building services sector will coordinate skills training in design, installation and maintenance of solar panel technology, heat and power, and wind and micro-generation. It will receive nearly $4.4 million in Government investment.

In a very different sector, funding has been confirmed for a $19.5 million skills academy that will train thousands of people for the theatre industry and provide hundreds of jobs. The National Skills Academy for Creative and Cultural Skills will be set within the Royal Opera House Production Park in Thurrock, in the Thames Gateway region, and will deliver industry-led training and apprenticeships for the creative sector. This will help address an anticipated need for 30,000 skilled backstage and technical theatre staff by 2017, and will provide technical accreditation and professional development for the existing workforce. The funding from the Homes and Communities Agency complements $7.5 million already committed by the LSC. Work will begin on the building later this year, and it should open in 2012.


Business Secretary highlights crucial role of RDAs
Business Secretary Lord Mandelson has also underlined the role that England’s nine Regional Development Agencies (RDAs) have played, and are continuing to play, in economic recovery. Speaking at an event to mark their tenth anniversary, he said that the RDAs had a proven record in helping Government to generate prosperity across the UK regions, building on a diversity of sectors and strengths and sharing growth widely across the country.

The remit of the RDAs, he said, was to take a strategic approach to regional economic management and to actively support business and employment growth. He remarked: “The RDAs, without any question at all, have done this job really well – they produce over four times the regional economic growth for every pound they spend or invest. … They’ve trained almost half a million people and helped create or secure little short of a million jobs over the last ten years. They will help government set the strategic course for recovery.”

He continued: “They are at the centre of our plans for a new 21st century British industrial revolution based on new technologies, new sectors, new markets – including the transition to low carbon – which are going to be the main drivers of economic change in our country in the years and decades to come. They are now having more responsibility passed to them for setting plans for skills training in their regions, which is of course a vital key to future growth. We see them acting as a critical intermediary between local businesses and universities and colleges. Universities and colleges do not operate in isolation from their regional economies – they are integral to growth prospects and jobs in these regions, as what they do spins out into new enterprises, commercialising the research and the pioneering innovation that is taking place in our educational sector.”

The RDAs have been central to the delivery of the ‘New Industry, New Jobs’ agenda, said Lord Mandelson. Working with central government and bodies such as the Technology Strategy Board, they have identified around $1.7 billion of investments in industrial capacities in key areas such as low carbon and advanced manufacturing. Under its Low Carbon Industrial Strategy, and working with the relevant RDAs, the Government has designated Yorkshire and the North West regions as a new Low Carbon Economic Area for Nuclear and South West England as a world centre for wave and tidal energy. Advantage West Midlands and the East Midlands Development Agency have coordinated $75 million worth of investment to support initiatives such as the new Low Carbon Vehicles Technology Project.

The Business Secretary continued: “If low carbon is our future – and it is – we have to make a UK-wide business of it, and make that happen in the regions, as has occurred in previous waves of industrial change. The alternative is very clear – if we don’t set up the businesses, if we don’t invest in the technologies, if we don’t apply our knowledge to the engineering and manufacturing that the low-carbon transition requires, then we will have to import it. … And today, we are announcing further big investments: more than [$96] million across the regions – all of it in new technologies, low carbon, industrial transformation. The high-value, high-skilled jobs of the decades ahead. We’re investing now to make sure we that have prosperity and jobs in this decade and in decades to come.”


New York catches up with London as global financial centre
For the first time, London has lost its top spot as the world’s leading centre for banking and finance, tying with New York in the latest Global Financial Centres Index, compiled by Z/Yen for the City of London Corporation. London’s score fell by 14 points in the semi-annual ranking of 75 global financial centres, due to concerns about new regulation and taxes planned by the Government. New York’s score rose only by 1 point, but this was enough to put the two cities level on 775 points, out of a possible 1,000. New York fared better than London for business environment, availability of people and infrastructure, although respondents agreed that New York had suffered more from the financial crisis.

The gap between the two centres has always been narrow, ranging from five to 19 points over the previous six editions of the report, which combines a survey of industry professionals with factors such as office rental rates and satisfaction with airports and transport links. London was one of only four cities to lose points in the latest survey. Asian cities meanwhile continued to rise in the rankings, with Hong Kong and Singapore, in third and fourth places, recording double-digit gains. The gap between London and New York and the rest of the world was at its narrowest since the survey began in 2007.

The most recent rankings were based on surveys taken from July to December 2009, when discussion of tougher regulation and higher taxes in the UK was at its height. Emphasising that this was a time of great volatility, the report stated: “The top-ranking centres have shown a much greater degree of stability in their perceived competitiveness to practitioners and are responding more robustly to the economic recovery. Respondents have assessed the two leading global centres of London and New York as level on ratings for the first time – a fact which bears out our view that these two are the ‘twin sister-cities of world finance’. The evidence of the survey points to the continued high ratings for these two leading global centres and reflects the multi-faceted nature of their competitive advantage. They both have rich institutional and communication linkages across the world. Respondents continue to believe that these two leading centres benefit from good levels of mutual cooperation.” Within Europe, it added, “London, Zurich and Frankfurt are seen as ‘Global Leaders’. They are well known globally, and have a rich environment of different types of financial services institutions.”

The financial services community was swift to react. “This research is a wake-up call for decision-makers,” said Stuart Fraser, policy chairman for the City of London Corporation, which promotes the UK financial services sector. “You can’t take this route [of bashing banks and bankers] without endangering the competitiveness of London.” Peter Vipond, director of financial regulation for the Association of British Insurers, observed: “The City’s role as a financial centre of choice will be under severe pressure if reforms to the financial system are not thought through properly. Our members are also clear that a stable tax system, which does not penalise global businesses through taxation of foreign profits, would greatly enhance the UK as a place to do business.”

Nevertheless, the UK capital remains an extremely attractive destination for overseas business investment. In February the city was named the leading ‘European City of the Future’ for the third time, once again topping the league tables at the biennial European Cities and Regions of the Future awards, run by fDi Magazine. The city emerged as Europe’s top destination for foreign direct investment after coming out on top in three out of seven categories – Infrastructure, Human Resources and Economic Potential. London also claimed second place in the category of FDI Strategy, triumphing in more categories than any other city in the ‘Major Cities’ group.

The fDi rankings also took into account the potential for economic development and the attractiveness of inward investment. In 2009 London attracted over a third more FDI projects than any other European city. Michael Charlton, chief executive of Think London, the city’s official FDI agency, remarked: “Our London consultants have helped more than 350 overseas businesses, which are generating in excess of 9,000 new jobs and safeguarding a further 2,900, set up or expand business in London since the city was last announced as topping the rankings in 2008.”

UK companies continue to increase spending on R&D
The top 1,000 UK companies invested more than $39 billion to develop new products and services and to improve productivity in 2008, according to the 19th annual edition of the R&D Scoreboard, published by the Department for Business, Innovation & Skills (BIS). The Scoreboard is an annual investigation of the top 1,000 UK and top 1,000 global corporate investors in research and development. Spend by the UK companies listed increased by 9.2 per cent in 2008 compared with 2007, revealed the report, with the increase being largely due to companies in the pharmaceuticals and biotechnology, aerospace and defence, software and computer services and banking sectors.

R&D was concentrated, with just 100 of the top 1,000 UK companies – dominated by the pharmaceuticals and biotechnology sector – responsible for 81 per cent of the total. The top ten R&D sectors in the UK in 2008 were (in order) aerospace and defence, alternative energy, automobiles and parts, banks, beverages, chemicals, construction and materials, electricity, electronic and electrical equipment and equity investment instruments. The top ten R&D companies across all sectors were GlaxoSmithKline, AstraZeneca, BT, Unilever, Royal Dutch Shell, Royal Bank of Scotland, HSBC, Airbus, Rolls-Royce and BP.

AstraZeneca and Rolls-Royce are two of the UK’s top ten spenders on R&D

Globally, the 1,000 companies most active in R&D invested $594 billion in 2008, an increase of 7 per cent on the previous year. The 46 UK companies in this group increased their R&D spend at a faster rate, at 11.1 per cent. The UK was one of five countries that claimed 80 per cent of R&D investment among the global top 1,000 companies, along with the US, Japan, Germany and France. Ranked by their value-added contribution, the top 50 UK R&D companies contributed some $577.5 billion to the broader economies in which they operate, with three-fifths of this amount deriving from just ten companies. With the exception of banks, all of these companies increased their value-added contributions compared with the previous year.

Although the current data highlight R&D spending in 2008, before the worst of the global economic downturn, the Scoreboard remains an important data source for tracking commercial investment over time. Science and Innovation Minister Lord Drayson said of the Government’s contribution: “Since 2000, we’ve provided almost $5.9 billion to innovative companies through R&D tax credits. The UK Innovation Investment fund is about to invest $487.5 million in promising technology firms. From 2013, we’re reducing corporation tax on income from patents to 10 per cent. The Government’s commitment to support companies with high-growth potential is clear.”


New funding secures future of UK automotive plants
The UK Government has announced a $405 million loan guarantee to General Motors Europe (GME) under its Automotive Assistance Programme, helping to secure the US car giant’s operations in Britain and the rest of Europe. The loan guarantee will be provided alongside extra support from GM in the US and support from other European governments. In all, General Motors has pledged to spend $2.6 billion on its European business, including Vauxhall in the UK and Opel in Germany. Business Secretary Lord Mandelson said: “I always said the Government would stand four-square behind Vauxhall … These are excellent plants employing a first rate workforce. We need Vauxhall to thrive as part of Britain’s automotive manufacturing base and following our negotiations with GM Europe I am confident it will do so.”

Opel/Vauxhall chief executive Nick Reilly, speaking at the Geneva Motor Show held in Switzerland in early March, said that the move was a vote of confidence in the company’s long-term business strategy, as well as in the UK’s automotive sector. Ed Whitacre, chief executive of General Motors, added: “It is of vital importance for GM to demonstrate our commitment for our European operations. We see this as a major step towards instilling renewed trust and confidence into Opel/Vauxhall’s customers, employees, business partners, unions, dealers and European governments.”

The Government has also announced a $6 million package that will safeguard jobs and production at Michelin’s tyre plant in Stoke-on-Trent in the West Midlands. The Grant for Business Investment (GBI), supported by Regional Development Agency (RDA) Advantage West Midlands, will support a project to extend the French-owned company’s current premises, install new equipment and modernise the production process. It will enable it to retread a new generation of Michelin Durable Technology (MDT) truck tyres and improve its existing processes. Peter Marsh, Michelin plant manager, said that the grant, payable over five years, would secure the long-term future of the site.

Production exceeded 360,000 units in 2009, and further investment has enabled a new range of petrol engines for the Mini to be built, supplying the Mini plant in Oxford and BMW factories in Germany, Austria and South Africa. Hams Hall director Mathias Hofmann said: “There is a strong team culture at the plant and we have a highly skilled and committed workforce with a wealth of experience. Our engines are built to the highest standards of quality and delivered to the vehicle production plants in the exact sequence they are required.”


Investment helps make low-carbon motoring a reality
Tata Motors of India, the owner of Jaguar Land Rover, has secured a $510 million loan from the European Investment Bank (EIB) to fund research and development into low-carbon technology. The eight-year loan, granted under the European Clean Transport Facility, will help finance development of micro- and full-hybrid drive trains and research into more energy-efficient car bodies. The loan is structured with guarantee support from several banks, with Credit Suisse taking the lead with JLR and Tata in arranging the structure. The State Bank of India also played a key role in guaranteeing the facility, together with a number of other leading international banks.

The pioneering work being carried out by JLR helped to secure the loan because the technology will lead to lower CO2 emissions across Europe, said the company, whose manufacturing bases are located in the West Midlands. Ravi Kant, vice chairman of Tata Motors, said: “This will support the progress of turnaround in Jaguar Land Rover’s business in challenging market conditions, alongside cost-cutting measures, increase of volumes and the improved margins strategy currently being implemented by JLR. We view Jaguar Land Rover as a key part of Tata Motors and we feel confident about its outlook for the future.”

Meanwhile, RDA One North East and the Office for Low Emission Vehicles (OLEV) have announced an $11.7 million fund to roll out electric vehicle charging points across North East England. A total of 1,300 charging points will be installed across the region over the next three years on streets, in car parks, at residential and commercial locations and at retail and leisure facilities, under OLEV’s Plugged-In Places programme. The Government has named London and Milton Keynes as the UK’s two other Plugged-In Places, joining the North East as trailblazers for this ultra-low-carbon technology.

The regional bid, coordinated by One North East, was financially supported by more than 40 regional partners from the public and private sector – ranging from local authorities to hotel groups, supermarkets and garden centres – who have pledged more than $1.5 million for charging points to be installed at their premises. One of the companies to have pledged money to the scheme is Eaga, which already counts electric vehicles among its fleet and is to install extra charging points at its new offices in Gosforth. This will accommodate growth in its own fleet and provide charging bays for visitors with electric cars.

Eaga is installing extra charging points at its new offices for its electric vehicle fleet.

OLEV will lead work to join up the Plugged-In Places initiatives, working closely with partners including the Energy Technologies Institute and the Technology Strategy Board to ensure that a fully interoperable network is established in the UK. This will include assessing the feasibility of charging along strategic corridors with the Highways Agency and motorway service area operators, and of charging infrastructure at railway station parking facilities with the Association of Train Operating Companies (ATOC) and Network Rail.


Low-carbon concept cars unveiled at Geneva Motor Show
Low-carbon technology was one of the leading themes at the recent Geneva Motor Show, the 80th in the event’s history. Westfield, a UK company based in the Black Country in the West Midlands, used the event to unveil its new electric racing car, the Westfield iRacer, which is made at a factory in Kingswinford. Besides its sporting credentials, the car is a significant step forward in the development of low-carbon technology. Its dynamically styled bodywork uses a range of materials, including composites, aluminium, recyclable plastics and a stretched lycra skin over an aluminium framework to create a lightweight, aerodynamically efficient and low-cost body.

The iRacer has been developed by Westfield in conjunction with project partners Potenza Technology, Delta Motorsport, RDM Automotive and Coventry University. Advantage West Midlands provided funding through its Advantage Niche Vehicle Programme, which is managed by Cenex, the Centre of Excellence in low-carbon and fuel cell technologies. Operational trials are currently underway in the West Midlands on a development vehicle. The car will appear at a number of demonstration events this year prior to its participation in a one-make electric car race series that is scheduled to launch in 2011.

Meanwhile Lotus has announced a strategic partnership with Cosworth, another famous UK automotive name, to develop high-performance engines for Lotus road and race cars. Under the new partnership, Cosworth will supply high-performance engines based on existing Toyota engines for future Lotus cars, and will assemble racing engines for motorsport activities, based on Toyota powertrains. The first application of these race engines will be for the V6 engine in the new Lotus Evora Cup racing car. Dany Bahar, CEO of Group Lotus, commented, “This new strategic partnership will align two of the most renowned names in the automotive world and will be of huge benefit for both organisations.”

In the city of Leeds in Yorkshire and Humber, local telecommunications firm aql is to install a high-speed fibre network in the central business district that will offer businesses internet speeds of up to 100 megabits per second (Mbps), at least 10 times faster than the national average. aql, a mobile messaging and communications specialist, operates several ‘exchange’ sites around the UK, including a fibre network between Leeds and London. It has installed a local fibre link from its Leeds sites to strategic points such as multi-tenanted offices, allowing businesses to access data and internet services at the faster speeds. The service has been rolled out initially in The Calls area, which is popular amongst the city’s media and marketing agencies.

One of the first businesses to trial the service is VTR North, a specialist post-production and editing suite that requires high-speed media connectivity to companies based in London. VTR can now upload 40 commercials in an hour to partners in London compared with 45 minutes per commercial previously. Adam Beaumont, managing director of aql, said: “This model allows businesses to get a head start on their competitors, reaping the advantages of high-speed working long before the delivery of the [Government’s] Digital Britain promise. Smart businesses already realise the advantages of not waiting for their mail to download or for a file to transfer.”

Also in Yorkshire, a ‘pay as you go’ superfast digital network is set to benefit local digital and creative businesses. The NorthernNet project, the first of its kind in the UK, will allow companies to gain access to high-speed connectivity and deliver 1GB files to anywhere in the world in less than two minutes. Central to the project are a number of Media Access Bureaux (MABs) in the region to which companies can connect. These are located at The Round Foundry in Leeds, Sheffield’s Electric Works, Scarborough’s Woodend Creative Workspace and East Coast Media in Grimsby. As well as local companies, a number of global digital and creative companies have bases in Yorkshire, including O2, the BBC, ITV and Tunstall Telecom. Sally Joynson, chief executive of Screen Yorkshire, said: “Digital infrastructure with high-speed connectivity is critical to Yorkshire’s creative and digital industries and their future growth. We’re hoping NorthernNet and the network of MABs will offer these growth industries a competitive advantage.”

Creative industries showcase their talents
Work has also begun on a new project aimed at boosting investment in the creative industries in Yorkshire. The Catalyst, part of York University’s $750 million campus expansion, will bolster the development of local IT, digital and media companies. The project, managed by Science City York and backed by $29.6 million of European Regional Development Fund funding, aims to build on Yorkshire’s creative investment potential. Companies using The Catalyst – which is due for completion this autumn – will be able to network and draw on the facilities and expertise of the university’s creative departments. Tracey Smith, general manager of York Science Park, said: “The Catalyst will provide the perfect space for early-stage companies in the creative, IT, digital and media sectors to innovate and grow.”

Representatives of 20 creative businesses from the West Midlands travelled to Texas in March to take part in the world’s biggest media and music festival. The South by Southwest (SXSW) event, held in Austin and now in its 24th year, is one of the most important in the film, music and interactive sectors. The delegation was part of a joint trade mission with UK Trade & Investment (UKTI), Advantage West Midlands (AWM) and Screen West Midlands, which aimed to showcase the innovation and skills to be found in the region. SXSW featured presentations from leading figures in emerging technology, music and film, as well as networking events hosted by industry leaders and sessions to present the best new websites, video games and software.

More than 20 per cent of the UK’s game developers are based in the Midlands region, and a $15 million digital media fund has helped to put the West Midlands at the centre of digital media development in the UK. According to AWM chief executive Mick Laverty, the region demonstrated to US companies that it could expand its businesses to service the UK and European markets, with support from an experienced and enthusiastic digital media community. “We have a highly skilled regional workforce and an impressive knowledge base in this sector, particularly in social media and games, where we are making significant advancements and nurturing the next generation of innovators,” he said.

New biotech research initiatives for industry and medicine
Work has begun to expand the Industrial Biotechnology demonstrator facility in Wilton, Teesside in North East England. The Government has invested $18 million in the facility at the Wilton chemicals complex, which will play a key role in developing novel and more sustainable advanced manufacturing and process technologies. It will be fully operational by the end of the year, giving companies improved access to the expertise and equipment needed to take advantage of market opportunities. It is estimated that the market potential for chemicals made by industrial biotechnology will rise to $18 billion in the UK alone by 2025. Funding for the IB demonstrator facility and expansion of the nearby Printable Electronics Technology Centre (PETEC) has come from the Strategic Investment Fund (SIF), which was set up to invest in the UK’s capabilities for industrial innovation, job creation and growth. It was announced as part of the Government’s Advanced Manufacturing strategy in July 2009.

Stemgent, a US biotechnology firm with bases in San Diego, California and Boston, Massachusetts, has announced the formation of Ubiquigent Ltd, a new biotechnology company located in Dundee, Scotland. Stemgent will invest around $4.5 million in the project over the next three years. Ubiquigent will produce biological products and services generated by the Scottish Institute for Cell Signalling (SCILLS) at the University of Dundee. SCILLS, directed by Sir Philip Cohen, is the world’s first research unit dedicated to the study of protein ubiquitylation, a process that regulates almost all aspects of cell life. Abnormalities in this process are a cause of cancer as well as of chronic inflammatory and autoimmune diseases. Keith Brown, Scottish Minister for Skills and Lifelong Learning, said: “This is an excellent investment for Dundee and for Scotland’s life sciences sector. Our pioneering research and technology is globally renowned. We have a clear academic lead in this field. The Scottish Government is fully committed to growing this sector and maximising the talent within the sector.”

Pharmaceutical company Genzyme plans to double the laboratory and office space at its Europe Research Facility in the Cambridge Science Park, Eastern England, where it studies advanced treatments for cancer, kidney diseases and immune-medicated diseases. The facility, which was Genzyme’s first dedicated R&D base in Europe, also manages clinical trials for conditions such as multiple sclerosis. Cambridge was chosen as the location for the facility because of the region’s global reputation for medical and scientific research. Researchers have already discovered several potential new drugs, which they hope to test further in clinical trials using the additional space. Carlo Incerti, European head of R&D at Genzyme, said: “The excellence of research in Cambridge is globally recognised and as a company we have benefited greatly from being part of that proud tradition of innovation.”


Minister outlines plans for high-speed rail network
Transport Secretary Andrew Adonis has announced proposals for a high-speed rail network linking London to Birmingham, Manchester, the East Midlands, Sheffield and Leeds, with trains running at up to 250mph. The development of a 335-mile ‘Y’-shaped network would bring the West Midlands within 30 minutes of London and mean journey times of 75 minutes or less from Leeds, Sheffield and Manchester to the capital. Connections onto existing tracks would be included, said the minister, allowing direct high-speed train services to be operated to cities including Glasgow, Edinburgh, Newcastle and Liverpool. Consideration will also be given to extending the network subsequently to other major destinations. Depending on the outcome of consultations and Parliamentary approvals, construction could start after the London Crossrail scheme is completed in 2017, with the high-speed network opening in phases from 2026.

The first step in building such a network would be a high-speed line from London to Birmingham, which will follow a route recommended by High Speed Two (HS2) Ltd, the company set up by the Government in January 2009 to investigate the case for high-speed rail. Full public consultation on that route, and the longer-term strategy for high-speed rail, will begin this autumn. Detailed planning work will also begin on the route options from Birmingham to Manchester and Leeds to allow consultation on these routes in 2012. HS2 Ltd has estimated a total cost of $45 billion for the core ‘Y’ network.

Under the proposals, the London-Birmingham high-speed line would run from a rebuilt Euston station to a new Birmingham City Centre station at Fazeley/Curzon Street. A Crossrail interchange station would be built at Old Oak Common in West London, giving the new line direct connections to the West End, the City and Docklands via Crossrail, to the South West via the Great Western main line and to Heathrow Airport via the Heathrow Express. A second interchange station could also be located to the southeast of Birmingham, offering direct links to Birmingham Airport, the National Exhibition Centre and the M6 and M42.

Initially the line would connect to Heathrow through a direct link to the existing Heathrow Express rail link at Old Oak Common, while the Government has appointed Lord Mawhinney, a former Transport Secretary, to examine potential options for a future station at the airport itself. Further work is also being carried out to assess options for a connection to the wider European high-speed rail network, through a dedicated rapid transport system linking Euston and St Pancras and/or a direct rail link to High Speed One, the line that runs from London to the Channel Tunnel.

Lord Adonis said: “The time has come for Britain to plan seriously for high-speed rail between our major cities. The high-speed line from London to the Channel Tunnel has been a clear success, and many European and Asian countries now have extensive and successful high-speed networks. I believe high-speed rail has a big part to play in Britain’s future.”


Freight traffic volumes fall slightly for 2009
In 2009, 2.38 million goods vehicles travelled from Great Britain to mainland Europe by ferry and through the Channel Tunnel, according to the latest statistics from the Department for Transport (DfT). This was 14 per cent lower than the 2008 total but 70 per cent higher than in 1992. Of the 1.76 million powered goods vehicles making the journey, 20 per cent (347,000) were UK-registered, a marginal rise on the 2008 share of 19 per cent. Since the early 1990s there has been a significant rise in the number of foreign-registered goods vehicles, from 394,000 in 1992 to 1.4 million in 2009. The majority of these were from Poland (259,000), followed by the Netherlands (176,000), Germany (153,000) and France (144,000). Eighty-six per cent of powered goods vehicles travelling to mainland Europe used the Dover Straits, including the Channel Tunnel. The North Sea ports were the main departure point for unaccompanied trailers, with 93 per cent of all unaccompanied trailers taking this route in 2009.

The DfT has also published provisional figures for freight traffic at the UK’s major ports for the fourth quarter of 2009. These show that total port traffic for the year to Q4 2009 was 10 per cent down on the four quarters ending Q4 2008. Inward traffic was down 11 per cent and outward traffic down 7 per cent. The number of units handled fell by 10 per cent. Inward traffic was down 9 per cent and outward traffic down 11 per cent. Unitised traffic (including containers and ro-ro traffic) was down by 4 per cent compared with the same quarter in 2008.

Birmingham International Airport (BIA) in the West Midlands has received a major boost with Spanish airline Spanair selecting the hub for its first scheduled operation in the UK. The airline will begin operating flights to Barcelona and Madrid in May. Barcelona will be served four times per week from 20 May, while the Madrid route will operate three times a week from 25 May. Spanair, a member of the Star Alliance network, will operate an Airbus A320 aircraft with 168 business and economy seats. Timings have been scheduled to meet business and leisure travellers’ needs and both destinations will be served all year round. BIA already offers services to more than 140 destinations worldwide.

Leading Indian firm acquires Yorkshire engineering specialist
Engineering group DavyMarkham, based in Sheffield, Yorkshire and Humber, has been acquired by Indian group Hindustan Dorr Oliver (HDO) for an undisclosed sum. The deal sees the 180-year-old Sheffield heavy engineering specialist taken over by India’s leading engineering procurement and construction company, a subsidiary of IVRCL Infrastructures and Projects. IVRCL is a major player in the Indian infrastructure industry, with a group turnover exceeding $1 billion and clients including the Oil and Natural Gas Corporation Limited of India (ONGC), Nuclear Power Corporation of India, the Airports Authority, Indian Oil Corporation and Tata Steel.

DavyMarkham is involved in the design, manufacture and assembly of large equipment used in the mining, quarrying, power generation, oil, gas and nuclear sectors, and it operates in international markets for tunnelling and mine hoisting equipment. In the mining industry, it has supplied more than 300 hoists across the world for use in environments from Northern Canada to the tropical coast of Ghana. A current mining contract involves the design, manufacture and installation of one of the largest and deepest mine hoists in North America. The group has supplied the largest-ever steel mill stand for China, tower saddles for suspension bridges in Hong Kong and San Francisco, cutter heads for a variety of tunnelling projects including the Niagara Falls hydroelectric project, railroad tunnels in China and an irrigation project in India. In the UK it has worked on such landmark projects as the Channel Tunnel, London’s Heathrow Airport Control Tower, Thames Barrier, London Underground tunnels and Gateshead Millennium Bridge.

The Sheffield-based company’s close physical and technical links to the nearby Nuclear Manufacturing Research Centre at the Advanced Manufacturing Park in Rotherham should enable both concerns to develop world-class engineering and manufacturing facilities for supplying new-build nuclear energy markets. HDO also intends to build DavyMarkham’s presence in the oil, gas and power transmission markets, utilising the group’s expertise and industry contacts.

Dan Renton of Deloitte, who advised on the deal, commented: “This deal is an excellent example of how a carefully controlled global M&A process can identify the right purchaser, even when they are as far away as India. In this economy, more businesses are looking harder and further afield to get the right deal and the strategic best fit.” Kevin Parkin, DavyMarkham’s managing director, said: “The good news for young people and their parents in the region is that we shall be able to offer jobs with a good future in an expanding industry, for many years to come.”


Regional news
GKN, a manufacturer of composite structures in over 30 countries, has formed a government-sponsored partnership with Rolls-Royce to set up a multimillion-dollar R&D centre at East Cowes on the Isle of Wight, off the south coast of England, to develop the next generation of aeronautical engines. The investment is backed by an $11.1 million grant from the Southeast England Development Agency (SEEDA). It is thought that the work on aero-engine components and structures will benefit other key industrial sectors in the UK such as marine, health, construction and energy. Rich Oldfield, technical director at GKN Aerospace, said “This facility will enable GKN, Rolls-Royce and the UK aerospace industry to bring world-leading composite fibre placement technology to the global aerospace market.”

Birmingham City Council has unveiled plans for the creation of a $60 million ICT village in the heart of the West Midlands city. The ‘Innovation Village’, which will be built at Birmingham Science Park in Aston, will involve the construction of four new buildings occupying more than 107,000 sq ft of space, with a 46,000 sq ft ‘iCentrum’ as the centrepiece. The site is expected to attract leading knowledge-based businesses and is being cited as evidence of the city’s determination to compete on the global stage. A council delegation attended the MIPIM property event in Cannes in the south of France in March to raise awareness among potential investors. Council leader Mike Whitby said he believed the area would become “a world class centre for innovation”. It forms part of Birmingham’s ‘Big City Plan’, which aims to regenerate several parts of the city.

Rare Games, a leading software developer owned by Microsoft, is to set up a base at Fazeley Studios, in the Digbeth area of Birmingham in the West Midlands. The move, in which RDA Advantage West Midlands (AWM) was closely involved, will establish the games designer’s second location in the UK. It will initially operate as a production and testing site, but the company is confident that the operation, due to open in April, will eventually house a world-class usability laboratory. AWM international investment manager Jane Holmes commented: “The West Midlands has a long-established video games industry. Rare’s arrival will further strengthen the region’s reputation around the world for excellence in computer games.”

US-based Diamond Foods is to acquire Kettle Foods, a maker of premium potato chips based in Norfolk, Eastern England, for $615 million. It is hoped that Kettle’s strong position in the UK will provide a platform for Diamond to expand into new markets in Europe. The Kettle brand has been a strong performer in the premium potato chip category and operates in both the US and the UK. The company pioneered the kettle-cooked style in 1982 with its natural ingredients and its “commitment to flavour”. Michael J Mendes, chairman, president and CEO of Diamond Foods, said: “We plan to invest behind the brand in several areas to position it for long-term success.”

German engineering firm Siemens VAI is to relocate its headquarters from Dorset in South West England to Sheffield in Yorkshire and Humber, bringing with it 80 jobs and a vote of confidence in Sheffield’s manufacturing and engineering expertise. Local development agencies claim that the move will bolster the engineering firm’s standing in the global steel industry, in which Sheffield remains a key player. The company’s UK managing director, Alfred Piesinger, said: “The professional and academic strength of this region will serve Siemens VAI’s business directly and our strengthened presence here also provides a means to access the region’s metals technology cluster for the wider Siemens group.” Siemens VAI Metals Technologies is one of the world’s leading engineering and plant-building companies for the iron and steel industry, for the flat-rolling sector of the aluminum industry and for open-cast mining.

Hallam Beauty, a personal care products producer based in Bradford, Yorkshire and Humber, has been acquired by European cosmetics giant Mibelle, a subsidiary of Swiss conglomerate Migros. Mibelle is one of Europe’s biggest personal care companies and has bought Hallam Beauty to further build its presence in the UK. Hallam, a subsidiary of Sheffield-based GRI Group, is one of the largest manufacturers of its kind in the UK, with a turnover of $55.5 million. It supplies white-label hair, skin, sun and baby-care products to a number of leading UK supermarket chains. GRI Group, which has a $156 million turnover, will continue as a significant joint venture shareholder. Philip Nuttall, a partner at Clearwater Corporate Finance, which acted for Mibelle AG, said: “The deal represents a key acquisition in Mibelle’s global expansion plans and a major step in Hallam’s progression, taking into account the increased resources and opportunities its new parent, Migros, can provide.”

Dubai-based airline Emirates is to create 60 jobs at its Wilmslow contact centre in North West England. The centre, which handles customer inquiries from throughout Europe, will increase its staff from 240 to 300. The expansion follows the airline’s launch of new services from Amsterdam, Prague and Madrid. The centre’s staff already speak more than 20 different languages and the company now wants to recruit more Spanish, Dutch and Czech speakers. Laurie Berryman, Emirates’ Area Manager UK North, said: “We never ceased to be amazed at the number of multilingual people available to us in the Greater Manchester area. Just when we think we may face a challenge finding speakers of a particular language, the applications come flooding in.” The centre opened in March 2000 with an initial staff of 50.

Welsh specialist building company Affresol has developed technology that can transform everyday household plastic waste into home construction material. The system takes recycled plastic waste from landfill and, through a cold process technique, transforms it into a liquid resin that can be poured like concrete. According to Affresol, the innovative new building material, known as Thermo Poly Rock, is stronger than concrete, fully waterproof and 100 per cent recyclable. Affresol has also developed a range of eco-friendly homes and modular portable buildings, the first of which has been ordered by heating specialist Worcester Bosch, which will contribute the necessary plastic for the building from recycled boilers. Affresol said it was equipped to build 3,000 new homes a year, using 40,000 tonnes of landfill waste, and has confirmed plans for a ‘show town’ of 19 homes in Merthyr Tydfil following approval from the Building Research Establishment, which helped to develop the technology. The company’s managing director, Ian McPherson, said: “Our management team and business partners believe there is tremendous potential for this new product, particularly with the growing focus on carbon reduction, low-energy affordable homes and sustainability.”

Insurance company Admiral, one of the UK’s largest direct car insurance providers, is to double its workforce at its office in Newport, South Wales by recruiting 200 new members of staff in the claims department over the course of this year. The company currently employs 188 people at its base on Langstone Business Park. Admiral Group People Services manager, Ceri Assiratti, said: “Newport has proved a huge success and we will continue to expand here.” Admiral is Wales’s only FTSE 100 company, with more than two million customers worldwide, and one of Wales’s largest employers, with 3,000 staff in Newport, Swansea and Cardiff. It has just signed a three-year deal with the Welsh Rugby Union to become shirt sponsor of the Welsh national rugby team.

Also in Newport, telecoms company Next Generation Data Ltd has completed two large-scale, custom-built data halls for BT and Logica in record time at its new mega-data centre. This will allow both anchor tenants to commence managed services operations ahead of schedule at the data centre, which at 807,000 sq ft is one of the world’s largest. Build-outs for both client organisations were finished in less than 16 weeks, compared with the industry average of 24 weeks.

Elsewhere in Newport, regeneration and development projects under way include a $52.5 million university campus in the city centre, which is to be completed later this year. The new campus will provide a home for the Newport Business School and the digital media, film and design elements of Newport School of Art, Media and Design. Vice-Chancellor Dr Peter Noye said, “At the centre of the new building will be a Hothouse which will be a focal point for creativity, innovation and entrepreneurship – all areas that the University of Wales, Newport strives to excel in.” The city will step onto the world stage this year when it hosts the Ryder Cup golf tournament. The whole of 2010 is a Festival Year for Newport, featuring the city’s biggest ever cultural and sporting events programme. Its Celtic Manor Resort, a five-star venue that will host the Ryder Cup, was recently voted the UK’s best conference hotel, winning the gold award at Conference and Incentive Travel magazine’s Hot List awards for 2009.

Swiss-based Odyssey Financial Technologies, one of the industry’s biggest providers of financial software, has opened a new base in Glasgow, Scotland. The company said that Scotland’s established finance community and skilled workforce were crucial factors in its decision to open its new Centre of Excellence for Software Development, which will join its three other development centres in London, Lausanne and Toronto. Odyssey provides financial software services for the banking and wealth and asset management sectors, specialising in portfolio management, customer relationships, compliance, risk and analytics. The new Glasgow base will focus on improving the firm’s development capacities and scrutinising its current technologies. The new venture, which will employ up to 20 software developers and testers by the end of April, has been set up with help from Scottish Development International, which provides support and grants for overseas companies investing in Scotland.

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