BQ2 Special Report

2

In association with

BUSINESS QUARTER North East: March 2016

SPECIAL REPORT

LET’S GROW FOR THE FUTURE

Bottling it

Drinking success

Progress ‘granted’ Engineers diversify

Automation path Efficiency the reward

APPLY NOW A grant scheme for businesses based in the North East.

The projects we can support are those which: Involve expenditure of £200,000 or more on capital assets or R&D and, where appropriate, training costs as part of a capital investment project Haven’t yet started Will be complete by March 2017 Will create or safeguard permanent, sustainable jobs Offer good value for money in terms of value of grant per job created Make a clear case for needing grant support Have adequate private sector funding for the project Comply with State Aid regulations

For further information and to apply visit www.be-group.co.uk or call 0191 389 8434 or email letsgrow@be-group.co.uk

BUSINESS UPDATE bqlive.co.uk

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EDITOR’S VIEW LET’S GROW FOR THE FUTURE

CONTENTS 04

BUSINESS UPDATE

08

GET UP AND GROW

14

HOME GROWN

16

SHOW SOME MUSCLE

20

GOING FOR IT

22

Keeping up with progress on growth

How thousands of jobs have been created

A valuable lesson in business success

Time is of the essence in the grants case

A to Z of going all out for incentives

LIVE DEBATE After Let’s Grow what could be coming next?

14 HG ROOMWE N A valuable lesson in business success

Welcome to this edition of BQ2 in which we focus on the Let’s Grow programme.

Set up in 2013 as a delegated fund from the Regional Growth Fund, Let’s Grow was the result of a remarkable regional initiative to meet the need for investment in a region most affected by public spending cuts.

In these pages we describe the origins of the fund, its operation and we profile some of its many success stories and interview some of the key players who made it happen. However, as Let’s Grow approaches the end of its life, with final bids called for by the autumn of this year, this BQ2 is not only a celebration of a highly successful scheme, it also analyses the reasons for its success and how these lessons can be built on for the future.

In particular, we carry a full report of a BQ Live Debate on the question: “What’s the future for investment grants in the North East?’’. In this, people who were instrumental to the success of Let’s Grow and some of its beneficiaries discuss their experiences and put forward their – often controversial – views on how to build on its legacy.

The debate throws up many questions but also a large degree of consensus that, although times have changed and the nature of grant funding must change, there does still need to be some support for the North East.

There was also agreement that Let’s Grow demonstrates how bodies in the North East – from public and private sector – work together for the common good, and how decisions for the region are best delegated to the region.

Peter Jackson, Editor In association with

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room501 Publishing Ltd, Spectrum 6, Spectrum Business Park, Seaham, SR7 7TT. www.bqlive.co.uk. Business Quarter (BQ) is a leading national business brand recognised for celebrating and inspiring entrepreneurship.

The multi-platform brand currently reaches entrepreneurs and senior business executives across the North East and Cumbria, Scotland, Yorkshire and the West Midlands. BQ has established a UK wide regional approach to business engagement reaching a highly targeted audience of entrepreneurs and senior executives in high growth businesses both in-print, online and through branded events. All contents copyright © 2016 room501 Ltd. All rights reserved. While every effort is made to ensure accuracy, no responsibility can be accepted for inaccuracies, howsoever caused. No liability can be accepted for illustrations, photographs, artwork or advertising materials while in transmission or with the publisher or their agents. All profiles are paid for advertising. All information is correct at time of going to print, March 2016.

BUSINESS UPDATE Cluster secures ERDF funding A regional industry-led group has started 2016 as the fastest growing cluster in the UK and is on course to become the largest automotive cluster this year. The North East Automotive Alliance (NEAA) beat its own membership target of 100 for 2015, just eight months after it was established, and now has 110 members drawn from sector giants including Nissan and Komatsu UK, to tier one suppliers and SME component manufacturers. Growing the SME supply chain in the North East has been a major focus of the NEAA. The initial SME programme surpassed its original targets of supporting 20 SMEs, safeguarding 15 jobs and creating 10 jobs, with support for 27 businesses, securing 30 jobs and creating 11 more. The NEAA will build upon this during 2016 with the launch of its ACE SME programme which will receive £1.3m over three years from the European Regional Development Fund and aims to work with 150 SMEs to improve their competitiveness and productivity. The UK’s biggest automotive cluster group, the Welsh Automotive Forum, set up in 2001, has 126 members, and the NEAA is on course to overtake it to become the biggest with a target of 200 members in 2016. NEAA chief executive, Paul Butler, said: “The industry support and leadership has really driven the Alliance in its first eight months.“All the top performing clusters across Europe are industry-led and we have followed those examples of best practice. Industry leadership ensures that we collaborate to address areas of concern and focus on the best opportunities on offer to the region.” Butler added “2015 was a fantastic success. This is down to a great team and the forward thinking companies within the sector who have grasped the cluster concept. It is great to see so many companies now working together to better the region’s automotive sector and we look forward to building on this success throughout 2016.”

“All the top performing clusters across Europe are industry-led and we have followed those examples of best practice. Industry leadership ensures that we focus and collaborate to address areas of concern and on those opportunities that offer the region the best opportunities ”

(l to r) Cllr Paul Watson, Sunderland City Council; Iain Wright MP; Lawrence Davies, Automotive Investment Organisation; Paul Butler, NEAA; Kevin Fitzpatrick, Nissan at NEAA’s launch in April 2015

Clive Owen grows in Durham Accountancy firm Clive Owen LLP has moved into new offices – doubling its space and taking on several new staff.

The firm launched its Durham office 19 years ago with two staff. Now, following “significant growth’’ and in anticipation of further growth in 2016, it has doubled its office space with a move to Kepier House, at Belmont Business Park. The move into bigger premises has seen the company take on several new starters including Claire Boyes and Cath Rodenby, both chartered accountants, along with student chartered accountant Simon Cornwall.

Since 2010, the office has added a new member of staff every year and is now 15 strong.

Partner Nicola Bellerby said: “We’re so excited to be in our new office. The team has worked very hard and we’ve really enjoyed seeing the level of growth and expansion. We opened in Durham 19 years ago with just two staff, so to achieve this success is fantastic.

“During the 19 years we’ve been in Durham there have been some downturns in the economic climate – clients have seen some difficult times and we’ve ensured that we’ve been with them throughout.

“Our success now is testament to working with innovative and progressive businesses, so we owe much to them as well”

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Institute recruits A strategic alliance between a Teesside based recruitment specialist and a research and development organisation has led to the appointment of three senior personnel within the last six months. Techconsult UK, based at the Wilton Centre near Redcar, which specialises in finding candidates for specialised roles in the process and petrochemical, oil and gas, renewable and subsea sectors, has been responsible for bolstering the commercial team at the Materials Processing Institute (MPI). MPI approached Techconsult in summer 2015 for help with identifying candidates for its commercial team. This supported the institute’s plans to diversify its business model to include providing research and process enhancement support for industries including automotive, aerospace, construction, nuclear, recycling, renewables, oil and gas for SMEs too.

by the continued growth of all of its service lines, including assurance, advisory, tax and transaction advisory services, with particularly strong growth in the government & public sector team, GPS, financial services advisory practice and personal tax. Hatton added: “This investment will help to accommodate growth in all of our service lines.” Investment in EY’s new GPS practice in the region has been led by a raft of senior appointments to help local public sector organisations prepare for new delivery

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models. Michael Scoular, partner in EY’s FS advisory services practice, said: “We’ve enjoyed stellar expansion over the last few years – responding to the requirements of our growing list of clients, who are financial institutions based throughout the UK and overseas.

“This new space will allow us to continue our growth trajectory, whilst providing our people, as well as the new people we plan to hire, with a first-class office environment where they can really develop.”

EY expanding EY is occupying a further three floors in CityGate on St James Boulevard, Newcastle, taking its North East base to 65,200 sq ft over eight floors across two buildings. The professional service firm – which in October 2015 announced that its headcount in the city had reached 500 following a period of accelerated growth – has taken 22,950 sq ft of new space in 1 CityGate East, adjacent to EY’s existing base at 2 CityGate. In addition, EY will fully refurbish two existing floors at 2 CityGate.

This latest investment, which is one of the largest property transactions in Newcastle in the last 12 months, follows a similar investment in October 2014, when EY took on an additional 11,143 sq ft at 2 CityGate. Mark Hatton, senior partner at EY in the North East, said: “This latest significant investment in the North East reflects our ongoing commitment to delivering growth here in the region, as well as our belief that it is a great place to do business and recruit some of the best professional services talent.”

Cording Real Estate Group, which agreed the investment with EY, provides investment management services to the landlord of 1 CityGate East, Britannia Invest. Cording was advised by Lambert Smith Hampton and EY was advised by Cushman & Wakefield.

EY said its Newcastle expansion had been driven

Bending reality Tech firm Hammerhead VT is helping to push the boundaries of virtual reality, picking up new clients on the way. The business was founded in 2014, by Teesside University graduate Christian Frausig with the help of a Fellowship from DigitalCity and the university’s graduate enterprise programme. Based in Newcastle, with an office in London, the company now employs 17 people, to create pioneering cinematic, virtual reality and immersive content experiences from visualising the human genome, to travelling through a fridge. One of the latest projects, launched at the Festival of Marketing 2015, was conceived and produced for global advertising agency, AMV BBDO, for their client Thunderhead, the cloud-based customer engagement platform. Building on the creative concept by AMV BBDO, the VR experience available to view on Littlstar.com, puts the viewer at the helm of Thunderhead’s ship in a futuristic Norse world.

The viewer flies through clouds on a metaphorical journey learning about the benefits of the technology. AMV BBDO chief creative officer and chairman Paul Brazier said: “Hammerhead VR impressed me with their creative flair, speed, and quality of production. I couldn’t have wished for a better partner.” Christian Frausig said: “It’s been an incredible journey. We’re really proud of the work we’re producing, the team we’ve built, and the talent we’re attracting. One of our clients picked up an award at the Festival of Marketing for the Boursin Sensorium, which we created, which was great recognition for the team. Everything we’ve planned to do since launching has come to fruition. We’re hopeful that we will be one of the many DigitalCity Fellowship success stories.” Frausig took part in Teesside University’s DigitalCity Fellowship scheme which supports entrepreneurs in developing their digital business product or idea. As well as support with living expenses, Fellows are also able to access industry-specific mentoring and coaching along with facilities and equipment at the university. Cheryl Evans, DigitalCity programme manager, said: “Hammerhead VR are undertaking some extremely exciting projects and positioning themselves at the forefront of their industry.”

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BUSINESS UPDATE bqlive.co.uk/breakfast

Infinitis open Hillthorn for business Three Infinitis opened Infiniti Drive, the new arterial road at Hillthorn, Sunderland’s newest business park, by driving through ribbon.

The 830m stretch of road is the first phase of highway to be completed as part of the infrastructure works for Sunderland’s A19 Ultra Low Carbon Enterprise Zone. The Enterprise Zone, which offers the scope to house major business developments aims to create more than 3,000 jobs and provide around 140,000 sq m of commercial space by 2037.

The £21m infrastructure project to upgrade the highways in and around the Enterprise Zone and the wider industrial area around Nissan has been supported by investment from the European Regional Development Fund, ERDF; the North East Local Enterprise Partnership via the Growing Places Fund; a provisional allocation of £5.95m from the Government’s Growing Places Fund; and Sunderland City Council, the landowner of Hillthorn Business Park.

Work began on the infrastructure project at the start of 2015 by contractor Esh Group, and included diverting and installing utility supplies to service the new business park. The scheme has had to be designed around wildlife in the area, including a colony of rare great crested newts and nesting birds on a nearby nature reserve.

Sunderland City Council leader, Councillor Paul Watson, who opened Infiniti Drive with Nissan vice-president for UK manufacturing, Kevin Fitzpatrick, said: “Infiniti Drive opens up Hillthorn Business Park for businesses that will be attracted to this site close to the A1 and A19 and next to Nissan, within our Ultra Low Carbon Enterprise Zone.

“The completion of Infiniti Drive is a significant first step. Once fully operational, the business park will have around 90,000 sq m of floor space and is expected to create around 1,000 jobs for the local economy.”

The Infiniti Q30 began production at Nissan’s Sunderland plant in December. The Q30 is now available from the Infiniti Newcastle dealership.

Fitzpatrick said: “The business park provides a direct route to our plant for companies working with us to build the Q30 as well as our existing models, Qashqai, Juke, Note and the 100% electric Nissan LEAF. “This will increase our efficiency and help us

Sunderland in top UK business spots A new report has named Sunderland as one of the best cities in the UK to start a new business.

Sunderland took fifth spot in an analysis of all 69 cities in the UK, beating the likes of London, Manchester, Liverpool, Birmingham and Edinburgh. The strong showing was based on comparison of some of the key issues for people starting a new business: the cost of commercial property, energy, virtual office services, public transport, broadband service, workforce demographics, access to finance and quality of life. Researchers also looked at the availability of good office space and broadband speeds, then marked their findings out of 10 to draw up the national league table. The report was put together by Quality Formations, which helps entrepreneurs to start-up companies. Sunderland achieved its high ranking largely due to its affordability compared to other more expensive cities. The city’s position was further strengthened by its broadband speeds, which average 22Mbps, among the fastest in the UK. This has helped attract technology firms to Sunderland. Researchers found that office space in Sunderland averages £12 per square foot, while value for money virtual office services cost around £85 a month. Housing accommodation costs were also favourable, at an average of £474 a month for a typical two-bedroom home. James Howell, compliance executive at Quality Formations, said: “Sunderland is a city with a lot going for it. In recent years, it’s emerged as the North East’s definitive answer to Silicon Valley – with more than 220 software companies raking in some £65m every year like clockwork. Working closely with the region’s five universities, tech startups are now flocking to Sunderland in order to take advantage of the city’s new, co-working environment – and with good reason. Between the council’s Evolve business centre, the University of Sunderland’s Software Hatchery and the gleaming North East Business & Innovation Centre, Sunderland provides new tech companies with an unparalleled level of support and low-cost facilities.” Councillor Paul Watson, leader of Sunderland City Council, said: “We’re delighted to be named as the UK’s fifth best city to start a business in the Quality Formations report.

“There is a vibrancy about Sunderland, a sense that opportunities are there to be taken and a real feeling that people with ideas and determination can make it.”

maintain our long-standing position as the UK’s most productive car plant and we look forward to welcoming new neighbours to Hillthorn in the future.” Sunderland City Council aims to appoint a contractor for the remaining phases of the Hillthorn highway scheme in the near future. These include improvements to the A1290 Washington Road, to the immediate

north of the Hillthorn Business Park connecting Washington to the A1 and A194 (M) via the Washington Highway (A182) in the west; and to the A19 in the east, during 2016.

A further 530 metre section of Infiniti Drive to connect it to Nissan Way is scheduled for 2016/17, followed by the dualling of Nissan Way.

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OVERVIEW bqlive.co.uk

“By sticking to a rigorous process we’ve been able to get these good value, high impact projects that have been successful’ In the aftermath of the great financial crash of 2008 and the subsequent public spending cuts the North East was sailing into choppy economic waters.

More than most regions it was heavily reliant on the public sector to underpin the economy and provide employment and the end of One North East also meant the loss of strategic direction based in the region.

However, the North East was not going to roll over and meekly accept its fate . With characteristic self-reliance and initiative, some key players got together to ensure investment was available for SMEs that were eager to grow and create jobs.

The result was the Let’s Grow programme, a remarkable initiative that did much to mitigate the worst effects of the recession.

It was born out of the Regional Growth Fund, RGF, which the Coalition Government set up to stimulate private sector investment in those regions most affected by public sector austerity.

RGF was originally designed to allow individual companies to bid to the Department for Business Innovation and Skills, BIS, for investment grants of £1m or more. That, however, effectively disbarred a large proportion of SMEs which didn’t have capital investment projects of that scale, particularly in the North East. But organisations in the region worked together to find a way around the problem. Accountants and business advisers UNW, independent business services group BE Group, publishing group Trinity Mirror and the universities of Northumbria and Teesside bid collectively, on behalf of the region’s businesses, for a general purpose grant fund for capital investment that companies in the region could bid into individually. Unlike the centrally

We show we have the get up and grow Scores of businesses in the North East have grown and thousands of jobs have been created thanks to the Let’s Grow Fund, as Peter Jackson reports administered RGF with its £1m minimum, Let’s Grow could provide grants for as little as £50,000.

“Let’s Grow is really a delegated fund, delegated from BIS to us in the region, as they previously had to the RDAs [Regional Development Agencies],’’ explains BE Group senior project manager Simon Allen. “It enables companies to bid to us for money they wouldn’t otherwise be able to get.’’

Let’s Grow bid for and received £30m, subsequently reduced to £27m. The formal offer was made in October 2012 and the fund was live from the beginning of 2013.

The fund was publicised in The Journal and the Evening Gazette and through an extensive

network of intermediaries such as accountants, banks and lawyers, as well as councils and membership organisations. All twelve local councils have not only promoted Let’s Grow to local businesses but have each contributed funds towards it’s running costs.

The application and awarding of grants was organised around a quarterly competition.

“Every quarter, we would open the doors and say, `Send us your applications. You can apply for any grant between £50,000 and £1m’,’’ says Allen.

Any project needing a grant of more than £1m required an application to the central

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OVERVIEW bqlive.co.uk

Government administered RGF. Let’s Grow was immediately popular with the business community in the region. Of the original £27m, £23.9m was paid out in grants, due to some recipients underspending. This represents a distribution of 89%, compared to an overall allocation for RGF of between 82% and 85%.

“We considered that to be good,’ says Allen.

Even better – the programme beat the jobs target it had been set. The £27m was intended to create 2,275 jobs but the programme achieved 2,501 jobs, net of any which were subsequently lost. The cash was allocated to a total of 93 companies. In only two cases have the companies failed or the projects been abandoned.

The companies securing grants were also spending their own money in order to be able to claim grant aid, so Let’s Grow also had a target for private sector leverage of £120m and achieved £136m.

“The reason for that is that we were very

facility in Newton Aycliffe from RFMD. “They approached BIS in the first instance,’’ says Allen. “They needed to acquire the plant very quickly because the previous owners were in receivership and BIS said this would be better dealt with by the region because we were closer to it and could move quickly. BIS allowed us to give a grant. That was a nice compliment to us from BIS.’’ Let’s Grow gave the company a £3m grant towards a £30m total investment, creating 175 jobs. Since then Let’s Grow has been allowed to accept grant applications of more than £1m, which it has done in a handful of cases.

To apply for a grant businesses must complete an application form, which is assessed by BE Group staff for eligibility and value for money. It then goes before an investment panel recruited from the private sector, universities and LEPs and chaired by John Cuthbert.

The panel’s assessment is based on three main criteria.

Allen explains: “Is there a sound business case

BE Group is the accounting body for the money to BIS and it administers the programme. It is also responsible for marketing Let’s Grow with Trinity Mirror as media partner.

Let’s Grow has been hailed as a success and has been welcomed by business and government.

The business community showed its appreciation by coming forward with plenty of good investment projects and the EEF, CBI and North East Chamber of Commerce have been enthusiastic supporters.

BIS was so impressed that it gave the programme a second tranche of £30m when Let’s Grow bid for it in the summer of 2014 as another round of RGF was opened.

The remaining £15m of the first tranche had to be spent by September 2015 so it went to shorter projects, meaning the second £30m could be devoted to longer term projects. By the end of December 2015, half of the second tranche had been invested, leaving £15m for which businesses can still apply before the autumn of 2016. It is anticipated that the

“We were very selective. The job of the investment panel is to look at projects on the basis of additionality – how much difference will the grant make, how much private sector leverage, how many jobs?’

selective about the projects that we supported,’’ says Allen. “The job of the investment panel who make the decisions as to which projects get grants is really to look at projects on the basis of additionality – how much difference is the grant going to make and how much private sector leverage is it going to generate and how many jobs is it going to generate?

“We are selective to choose the best value projects where a business was putting in substantial funds of its own and, on average, the grant constituted less than 20% of the total project value and that’s how we got more private sector leverage and more jobs by being selective and picking the best projects.’’

Also, the jobs created have been good quality with a mean average salary of between £20,000 and £25,000.

The original £1m cap on grants under the Let’s Grow scheme was removed by BIS at an early stage following a large application from Compound Photonics, of Phoenix Arizona, when it bought a semi-conductor manufacturing

for what they are proposing, is it viable, will it grow the business, will the jobs that it generates be sustainable? Secondly, is there a strong case for grant support, or are they just going to do it anyway? Is the grant going to trigger the investment, is it going to make the difference between it happening or not? Thirdly: job impact. Are there enough jobs of high enough quality?’’

If satisfied on those three criteria, the panel will approve the application, which will then go to UNW for in-depth due diligence. If UNW’s report is satisfactory, the applicant receives a grant.

“By sticking to this rigorous process we’ve been able to get these good value, high impact projects that have been successful,’’ says Allen.

The projects are monitored – for three years in the case of SMEs and five years in the case of large companies – to ensure that the conditions of the grant are met and that the jobs are sustained.

UNW do the due diligence and provide expert financial advice on applications and on state aid;

second £30m will lead to the creation of 3,000 jobs.

“That’s a greater rate of job creation than the first lot because experience has shown us that we are getting better value jobs out of it so we went for a more aggressive target,’’ says Allen.

The full £57m should create 5,275 jobs.

“Phase two looks like being better value jobswise than phase one,’’ says Allen. “It’s to do with the mix of companies and the type of jobs.

Typically manufacturing and engineering jobs are more expensive than business services jobs.’’

Let’s Grow has been so successful it has led to a couple of spin-off initiatives.

BE Group successfully bid for another round of RGF and secured £4m for a similar programme in North and East Yorkshire in the area covered by the York and North Yorkshire LEP. This has been delivered at the same time as the second phase of Let’s Grow in the North East. The technical partner for Let’s Grow North and East Yorkshire is Clive Owen LLP and the media partner is BQ magazine.

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Fund gives job satisfaction

Let’s Grow also gave rise to the Tees Valley Business Support Scheme which was introduced in the autumn of 2015 in response to the closure of SSI UK in Redcar. Following that economic bodyblow a taskforce was set up chaired by the chief executive of Redcar Council which asked the Government for money to aid the SSI supply chain.

BIS made £80m available, the bulk of which went on redundancy payments which SSI couldn’t pay.

But £16m was made available to the LEP Tees Valley Unlimited, TVU. TVU and BIS approached BE Group to operate a grant fund for businesses affected by the SSI closure.

“We have a flexible package of grants, it’s not just about capital investment,’’ says Allen. “It’s often about providing a working capital injection to enable businesses badly impacted, which lost a lot of money as a result of the closure of SSI to survive in the short term, diversify away from SSI dependency, gain new business and thereby create or safeguard jobs. It might be an IT company, or a food or drink company, it doesn’t have to be engineering and manufacturing in steel, it’s about the wider Tees Valley economy, because there have been a series of economic shocks in Tees Valley, it’s not just SSI, there have been other closures in the past three months that have created a perfect storm.’’

Businesses applying for a grant have to demonstrate that they are viable and have a recovery plan to win new customers. The scheme is there for longer term support and runs until March 2018.

“We are not propping failing businesses up here, but what we are doing is creating breathing space for businesses that are viable to help them pay their debts and meet the payroll costs on a month-tomonth basis,’’ says Allen.

The Tees Valley Business Support Scheme is intended to complement Let’s Grow. The maximum grant is 200,000 euros – about £150,000 at the current exchange rate.

He adds: “We were approached and asked to do that because we do Let’s Grow and therefore had the track record of being able to do this kind of thing and mobilise it very quickly.’’

All good things must come to an end and businesses wanting to take advantage of Let’s Grow must get their application in by the autumn of this year. That will leave a big hole.

Allen says: “Once we have allocated the second tranche, there will be no general capital investment fund for businesses available in this region. The fund that the LEPs have is not for these purposes, it’s not a business grant fund, they don’t have those funds available.’’

Let’s Grow has demonstrated the effectiveness of administering such schemes at a regional level and it particularly underlines the expertise available in the North East.

Allen says: “BE Group is always bidding for contracts of various kinds and we’ve had a couple of recent successes with other grant programmes and our track record with Let’s Grow has helped us to win that new business. It’s one of our strengths.’’ n

Simon Allen joined BE Group in early 2013 to manage the Let’s Grow programme and similar funds. Prior to that he had been with the regional development agency One North East, ONE, as regional business support manager, a job he did for six years. In that role he was responsible for managing the Manufacturing Advisory Service and the regional Business Link contracts. He was born in Blackburn in Lancashire but made his home in the North East. “I came here to go to Durham University in 1984 and never really left, I love the North East,’’ he says. After university he had a number of jobs in distribution and the customer service side of manufacturing before becoming customer service manager for Silentnight Furniture in Sunderland and Keighley. Allen joined Business Link in 2001 where he was operations manager for Business Link in County Durham. After three years he became self-employed managing a range of grant programmes “and similar business support stuff’’, which he did for another three years before joining ONE. He has two children and lives in Barnard Castle.

How does he find his current role? “It’s tremendously satisfying to see businesses that have projects that are really going to make a difference, to really make a step change, whether that’s moving to larger premises or buying new plant and machinery to make something for a new exciting market. It’s really stimulating to see those being brought to fruition with a bit of grant help. We shouldn’t underestimate how risky these projects are for the shareholders of the businesses. What we are doing is giving them a relatively small amount of grant funding. Even if it’s £1m, it’s probably a £10m project that they are entering into. It’s them taking the risk, it’s they who have to do the hard stuff. We’re just providing a bit of oil for the wheels but, as I say, that’s tremendously satisfying.

“The variety of businesses we get to see means it’s never boring. It can be an IT company or a games designer one day a heavy engineering company the next.”

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INTERVIEW bqlive.co.uk

There’s a lesson in a homegrown success John Cuthbert, chairman of the Let’s Grow fund investment panel, talks to Peter Jackson about the fund’s success and the lessons to be drawn from it

INTERVIEW bqlive.co.uk

John Cuthbert has an impressive business pedigree. He was a highly regarded chief executive of Northumbrian Water for almost nine years, chairman of the Northern Business Forum for more than four years and served on the board of the regional development authority One North East. He holds a couple of non-exec board positions, is a trust board member of the Sage Gateshead and was chair of governors of the Castle View Enterprise Academy. He has also been awarded an OBE. So why take on the not undemanding role of chairing the Let’s Grow investment panel?

“It was something that came about when the economic situation was challenging and this was clearly an opportunity to try to have an input into some positive projects in businesses within the North East that might otherwise not have an opportunity to go ahead,’’ he says.

One of the strengths of the Let’s Grow programme has been its investment panel, made up a people from the worlds of business, academia and support organisations.

Cuthbert says: “We’ve always been able to call upon a wide range of sectoral expertise so we have people there who are able to make a contribution with knowledge of particular sectors that the applications are coming through from.

“Our role is to do a first formal evaluation of a project application following the initial work done by the team at BE Group and, based on what’s presented to us, make a decision as to whether or not that particular project should be pushed through for formal appraisal with UNW.’’ So, are the meetings characterised by passionate debate?

“There’s always healthy discussion,’’ he laughs. “Unsurprisingly you don’t always have everybody agreeing. What tends to happen is that people are swayed by the arguments made by those either passionately in favour or passionately against. As chairman I’ve avoided ever having to take a vote on an application, we’ve always managed to get to a position where we have reached consensus and all panel members have been happy to sign up to the final decision.’’

It is worth pointing out that for him and the panel members the only reward is the satisfaction of working for the good of the regional economy.

“The panel members have volunteered to give

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“To get positive stories out there demonstrates a can do attitude, and demonstrates there are people creating jobs’’

up their time because they share the same sort of passion for a thriving economy here in the North East that I have,’’ he says. “I’m hugely grateful not just for the time that they give up but also for the care and attention they give in considering each of the applications.’’

That time, care and attention is reflected in the success of the programme which has exceeded its targets. The majority of applications have been successful and received grants. Cuthbert is particularly pleased by the variety of successful applications.

“We’ve had a very wide range of business sectors and a good geographic spread covering the whole of the region. Clearly, we’ve had some hot spots as you would expect but there have been projects from right across the region.

“We’ve seen some quite small grant applications where it’s a small company operating in a particularly competitive environment, perhaps with not very many employees at the moment but with a project that would double the size of the business. Also, we’ve seen applications from much bigger organisations that are much more run-of-the-mill kind of projects for those kind of organisations.’’

He was pleasantly surprised that, even in the subdued economic climate post Lehman Brothers, there were such high quality projects in the North East.

“I’ve been extremely pleased by the projects that have come forward,’’ he says. “You always have a slight doubt in your mind, the economic climate being what it has been and with everybody being perhaps a little more cautious than they might otherwise be. That always leaves you with a slight concern as to whether there’s enough going on out there, but that’s certainly not been a problem, we’ve had some really first class projects.’’

Perhaps a less tangible part of Let’s Grow’s success has been in lifting business’s spirits in the economic hard times?

Cuthbert agrees. “Demoralised is probably too strong a word but people get downhearted reading about the difficulties businesses are going through with lay-offs and wages being held back. To get some of these positive stories

out there hopefully demonstrates a bit of a cando attitude and demonstrates to younger people that there are people out there creating jobs and creating opportunities for them.’’

He also hopes it sends a message to London and to central Government when it sees Let’s Grow’s impressive figures in terms of jobs created, private sector funding leveraged and numbers of businesses helped.

“I think it would stand comparison to pretty much anything else that is happening anywhere else in the country and hopefully that’s a message that gets through to national politicians. It might upset a view which might have been prevalent in the past that they’d almost written the North East off but here are some numbers that say there are things happening in North East England.’’

It also strengthens the case for putting regional funding decisions in regional hands.

“Government are to be applauded for setting up Let’s Grow and taking notice of representations that were made,’’ says Cuthbert. “It was even more positive that they passed the responsibility out to the region. If they had pulled that into the centre, I don’t think it would have been as successful. By drawing on the expertise of the region and including the voluntary input given by panel members they were giving it to people who actually understood what was going on in the region.

“We’ve also been able to be light on our feet when fast decision-making was needed to secure major investments.’’

The big question now is: what should be done when Let’s Grow comes to an end? Cuthbert believes the success of Let’s Grow should be made clear to policy makers.

“I believe we should be making a case to Government that they should consider very seriously whether or not there is an ongoing public sector involvement in terms of funding.

It might not necessarily look the same as Let’s Grow but there’s enough evidence there that we can say to Government, `You have invested in North East England and you have got a return on that investment.’n

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INTERVIEW bqlive.co.uk

Let’s make a strong case With the end approaching for Let’s Grow, it’s even more important that businesses make strong applications, as Neville Bearpark explains to Peter Jackson As the Let’s Grow programme draws to a close the pot of money available for grants empties.

Less money has implications for applicants still wanting to take advantage of the scheme, as Neville Bearpark of accountants UNW explains.

“The whole programme is a competition and as it comes towards its end funds will be scarcer and this highlights the need for a strong application because we’ll get to the point where we’ll perhaps need to raise the bar. It’s a competition, everybody has to put forward an argument as to why they need it and if the panel don’t think that argument is strong enough they will reject it.’’

So, what makes a good application?

First, it’s important to remember that Let’s Grow has to meet strict rules laid down by the Government and the EU State Aid Rules.

It can support sound investment projects from businesses typically in the manufacturing sector or which provide a service which has a reach for a B2B service beyond the North East, such as a national IT provider.

The amount of support asked for must be the minimum needed but mustn’t exceed the limits imposed by State Aid rules. This means a maximum level of support of 30% on capital projects and 25% on R&D projects.

Depending on size of the applicant and project location these limits can be as low as 10%.

State Aid rules say large company capital investment projects can only be supported where they represent a new activity for the applicant, the project is not a relocation project and the applicant has not closed down similar activities in the UK. A change in the State Aid rules means a larger company (employing more than 250 people) could qualify if the project means the employment of `disadvantaged workers’. This could be somebody who has been unemployed for six months, or somebody under the age of 25, or is just leaving full-time education, and also anybody over the age of 50.

Female workers might come into this category if there is a gender imbalance in an industry such as engineering.

“So if a business is employing that sort of profile of people we might be able to do some interesting things in terms of the grant,’’ says Bearpark.

For the Let’s Grow programme, the investment panel will focus on the difference the project will make. Here, the jobs impact is vital. The panel looks at the number of jobs created in relation to the grant and, as a general rule, wouldn’t expect the grant to exceed £10,000 per job created or safeguarded.

Only projects that can demonstrate that the amount of grant is genuinely needed will be supported. It might be that grant support is needed to mitigate project risks or influence the location of a project that might otherwise go overseas.

There is also a need to demonstrate the viability of the business and that the project is deliverable through a robust business plan and strong management.

Let’s Grow is not for local businesses which provide only a local service, such as shops, hotels, or care homes. Property development and infrastructure are also excluded – there is other support available for such schemes

“We don’t want to support struggling firms because they might not sustain the jobs. We want to see successful businesses’’

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from the LEPs and European funds such as the new ERDF programme.

Others that would not qualify are projects already underway or which can proceed regardless of grant; where they cannot provide clear evidence that all other possible funding sources, including internal, have been used; projects which displace jobs elsewhere; companies in financial difficulties; and applicants which cannot demonstrate there is adequate conventional funding in place to deliver the project. Bearpark explains that many companies which contact BE Group with an expression of interest fail.

“The reason they fail is that they don’t read the scheme criteria. But we make it quite clear there are certain sectors we can’t support and applications from those sectors will be rejected right at the very beginning. The scheme is really aimed at manufacturing businesses and those that service that sector.

“The next hurdle is compliance with State Aid rules. So, applications could be in the right sector but might get knocked back because they fall foul of some of the technicalities around State Aid Rules. “If they get through the initial stuff, it’s a question of what the investment panel rejects applications for. More often than not, it’s simply because they don’t believe the applicant needs the grant. Quite often a company is very profitable, has lots of cash and they don’t need support and that’s a valid and common reason for rejection.’’

The last hurdle after the panel is UNW’s due diligence.

“We reject very few at that stage and it would be on a real technicality or because the company had lied on its application,’’ says Bearpark.

And is making an application to Let’s Grow an onerous and time consuming business?

“No, it’s not. It’s always a criticism of grant applications and people will say it’s too much hassle and too much red tape. We don’t think it is and across all 150 applications I can’t recall an instance where anybody has said it’s too difficult.’’

Applicants can always use the services of an accountant to help them with the application and about half of the Let’s Grow candidates do so.

“Potentially an adviser could add value but it’s by no means needed,’’ says Bearpark.

Furthermore, the work that goes into making an application can bring benefits to a company that

“We need to get the message across to the Combined Authority and the LEPs and the Northern Powerhouse that this is a worthwhile programme. It has been immensely successful’’ go beyond the grant itself.

He adds: “We do require a business to provide us with what is tantamount to a business plan.

They have to do financial forecasts and they will be monitored against those forecasts. So, I think a spin-off is a bit of external diligence in their business. There are also benefits in going through the appraisal by UNW because when we do that we will provide some advice for a company if we think there are issues.

“It’s also important in that it forces the business to focus on how it’s funding an investment.

We challenge them on how they are going to fund a project. It’s not just, `Have you got the £100,000 you need to buy the machine?’, it’s, `Have you got the working capital to stay in business for the year after you’ve bought that machine?’ We will look in some detail at their cash flow forecasts.’’

So, there are rules but businesses which make applications for help to the Let’s Grow programme should not feel daunted. The investment panel, UNW and the BE Group are all on their side.

“I feel passionate about this,’’ says Bearpark.

“We really do want them to succeed. We worked really hard to get the RGF money in the

first place and every member of the panel is passionate about ensuring that that money is spent properly and diligently on projects which are going to create a load of jobs in the North East.

“The worst case scenario is that at the end of this programme we have to give some of that money back to the Treasury. We don’t want to do that.’’

He emphasises the importance of grants going to strong businesses.

“Sometimes there’s a sense that businesses that get grants are the ones that are struggling and are the ones that desperately need cash.

We don’t want to support businesses that are struggling because they might not sustain the jobs. We want to see successful businesses.

“That will then give us the best chance to position ourselves to ask for some more funding, which is the biggest challenge we’ve got now. When RGF money runs out, where are we going to find any more for this programme?

We need to get that message across to the Combined Authority and the LEPs and the Northern Powerhouse that this is a worthwhile programme. We can demonstrate that it has been immensely successful so far.’’ n

PROFILE UNW

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Linking-in at the UNW Events Programme 2016 Newcastle accountancy and advisory firm UNW has launched its 2016 programme of events, workshops and seminars covering topical issues to help develop and grow clients’ businesses With a number of expert presenters sharing great insights in a range of areas, one of the first events was about building a better network using social media – namely LinkedIn. LinkedIn has been described as a networking event that doesn’t end – where all those business cards and connections you’ve collected over the years keep themselves automatically filed, updated and available for whenever you may need them.

But are you making the most out of LinkedIn? It’s the most obvious first calling point when finding out about someone and if you’re looking to make new connections, find a new job, win new business or keep abreast of the latest industry news and thinking, LinkedIn is a phenomenal tool that you should be taking full advantage of.

Over 40 local businesses attended UNW’s LinkedIn masterclass – where Mark Williams, the UK’s leading independent LinkedIn trainer, aka ‘Mr LinkedIn’ delivered an expert’s guide on how online networking can make a real difference to your bottom line. should explain what expertise or skillset you can Business owners from across the region attended, bring to prospective employers or customers. taking copious notes and providing great post-event LIVE CONTACTS – keep your contacts up to date and feedback that proved there’s an ever-growing available for when you need them - LinkedIn allows appetite for making better use of social media in the you to tag, make notes and set reminders to get in corporate world. touch again in future.

Ahead of the session, we asked Mark to give us his INMAIL – if you send an email via LinkedIn you have top ten tips for getting the best out of LinkedIn. a 40% better opening rate than with regular email – The first impression you create often defines the as recipients can see who you are from your profile, relationships you can build – so make sure your giving your message greater substance. profile is impressive and well produced. It’s really STATUS UPDATES –LinkedIn’s status updates are an worth investing time in writing an impactful profile ideal way to remind people that you exist – keep it that explains exactly who you are and what you relevant and interesting information or comments can offer. that will provoke positive conversations and PROFILE PHOTO – you wouldn’t go to a networking engagement. Image updates are more likely to get event in a hoody and a mask, so make sure your noticed, so get creative. profile photo gives a clear and professional COMPANY PAGES – creating a company page gives impression of what you look like. Make sure it is close you more opportunities to make contact with new up, looks professional (no holiday snaps) and was UNW Events Programme 2016 people, adds branding to your personal profile - and taken recently! allows them to follow you for updates.

PROFESSIONAL HEADLINE – you have 120 characters GROUPS – a great way to stay abreast of the latest to outlines what you are and what you offer. It industry activities, thought leadership and news doesn’t need to be your most recent job title, but

– and enables great conversations with peers and potential customers/employers. Start talking!

RECOMMENDATIONS – we read and trust reviews by complete strangers when buying products online, but with LinkedIn you can see the credentials of the person making the recommendation by clicking through to their profile – gives much greater weight and power so becomes invaluable.

ENGAGE THEN CONNECT – When looking to build your network, always engage with a person before asking to connect. Genuine contact via discussions on group pages or messaging first shows you are serious about building a relationship.

For more information on UNW’s events programme please contact 0191 243 6000 or email events@unw.co.uk

Linking-in at the UNW

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BRIEFING bqlive.co.uk

A to Z of a grant Grant claims are usually made and approved in instalments on a quarterly basis. The officer will make regular visits to monitor progress and organise the payment of claims.

Let’s Grow is operated as a series of quarterly rounds. The first stage of the application process requires an interested company to send an expression of interest, EOI, which can be done by downloading a form from the BE Group website. This can be done at any point irrespective of the quarterly rounds.

There are deadlines for each of the quarterly competitions. The next one is 6 May 2016 for the EOI with a full application deadline of 3 June and the dates for the one after that are: 5 August 2016 and 2 September respectively.

“We then assess that EOI internally against the

scheme guidelines,’’ says Simon Allen, BE Group senior project manager. “Those that are eligible are invited to submit a full application and again there’s a deadline by which you need to send us that full application for each round.’’

The full applications are assessed and summarised by the BE Group Let’s Grow team for the investment panel. Some 69% of EOIs result in summaries going forward to the panel, of which it approves about 70%, making an overall approval rate of about 45% of all the original EOIs. In the interests of efficiency and fairness the

panel sees the applications in a standardised format.

The panel meets quarterly and will usually hold two or three meetings in a round. Each meeting will typically look at 10 applications. This is a thorough process.

“We meet for three hours and every application gets a reasonable going over and the panel are sent papers in advance so they’ve got time on their own to consider the information and then to discuss it at the meeting,’’ says Allen.

The member of the BE Group team who provided the assessment of the application

“In the interests of efficiency and fairness the panel sees the application in a standardised format’’

BRIEFING bqlive.co.uk

will be at the panel meeting to provide further information.

“They will have spoken to the business and, in some cases, they will have been out to see it and they are there to back up the information,’’ says Allen. “If the panel is unable to make a decision – which is rare but does sometimes happen – they would defer it for us to go back and get more information from the applicant, but usually they either decline it or approve it.’’

Once the panel has made its decision the business is informed. If a business’s application is declined, it can resubmit, but only if it has new information to present that the panel has not seen or if there has been some material change.

Successful applicants are informed that their application is going forward to UNW for a full appraisal, for which there is a fee amounting to 2% of the grant. UNW will then use standard criteria to collect information on the business and its investment project. The firm prepares a report that covers State Aid compliance, viability, the jobs to be created and the expenditure the company will incur.

UNW’s report is sent to the relevant team member at BE Group before being passed to a director to approve the offer of a grant.

“In their report UNW will recommend a course of action. Very rarely they say, `you shouldn’t offer these people a grant’,’’ says Allen. “They will either recommend giving the amount the panel approved or a bit less. In some cases it’s a bit less because they might have found a restriction within the State Aid rules which was a bit obscure which means they can’t have quite as much as they wanted, but most of the time it’s the amount that the panel has approved.’’

Less than 2% of applications have failed at this stage. If successful a legal offer of grant is made and a named officer is appointed from the BE Group team to liaise with the business while they deliver the project. Grant claims are usually made and approved in instalments on a quarterly basis. The officer will make regular visits to the business to monitor progress and organise the payment of claims. BE Group also asks for periodic reports from the business after the grant has been paid on the jobs created. n

“If an application is declined it can resubmit but only of it has new information to present’’

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LIVE DEBATE

THE VOICE FOR BUSINESS DEBATE

The issue: The highly successful Let’s Grow Fund will come to an end next year but what follows? An expert panel, many of whom were closely involved with the project, debate the question: `What’s the future for investment grants in the North East?’

Brian Aitken: Recalled how, when he was editor of The Journal, he, Alastair MacColl and Neville Bearpark had been instrumental in setting up Let’s Grow and had recruited John Cuthbert as chairman of the investment panel.

He pointed out how other people around the table had also served on the panel or were from companies which had benefited from Let’s Grow investments.

Neville Bearpark: “It’s been rewarding to see so many regional businesses come to the Let’s Grow programme and go on to deliver something and we have examples around the table. Having been involved in the grants scene for many years it does worry me that with current government policy things are going to change and if we don’t tackle that head on there is a significant risk that the North East will see that access to grant support diminish significantly and I think we need to do something about it.’’

David Greatorex: Pointed out that he represented a rare thing in the UK – a growing manufacturing company. Hydram Engineering employs about 220 people and has an

annual turnover of between £40m and £50m manufacturing for OEMs such as Caterpillar, Mitsubishi and Hitachi Rail. “We have benefited significantly from RGF support and have had three bites at the cherry. It really has made a difference to us, through RGF we have committed about £5m and been paid about £1m and through that we’ve created about 100 jobs.

Would they have been created without RGF? Certainly we would have continued to invest as a business because that’s what we do but during the turbulent times we have seen over the last four or five years we would not have invested on the scale we have and RGF has given us the confidence to take a slightly bigger risk than we might have done without it.’’ He said there was a debate as to whether such grant schemes represent value for money for the taxpayer.

“I’m biased, it’s helped us grow, without it we wouldn’t have grown at the same pace.

We’d be disappointed if RGF wasn’t to continue in the future for other businesses like us that could benefit.’’

Phil Hourigan: Explained that he managed a

team of 14 commercial managers looking after businesses of between £250,000 and £40m in turnover and that they would shortly be rebranding to Williams & Glyn in April and will become an independent challenger bank in 2017.

David Rose: Told the meeting that his 50-yearold family business had received RGF support to help it move into a new industry sector and to re-shore manufacturing back to the UK. Stephen Catchpole: “I’ve really enjoyed my time on the Let’s Grow panel and looking at the details of the companies, what they want to do and why they want to do it.’’ However, he pointed out that TVU has had more involvement in RGF than Let’s Grow, having accessed some £200m.

Alastair MacColl: Explained that he was chief executive of business services company BE Group which specialises in business-to-business publishing, including magazines such as BQ, and manages business-to-business events. It also runs a range of commercial development programmes for the private and public sectors. It is responsible for managing, operating and accounting for

LIVE DEBATE bqlive.co.uk

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TAKING PART

“Some companies are doing some really great things. Being able to support the next step in their growth has been tremendous’’

the Let’s Grow programme, with the support of UNW, Trinity Mirror and the LEPs. He added: “I’d like to say a big thank you to the investment panel and to John for chairing it. The panel took all the very difficult decisions and did all the heavy lifting to make the scheme possible.’’

Colin Bell: “This debate is timely and one thing that really interests me about it is local growth funding, where we should earmark it and where our priorities should be. Should we be trying to continue some of the good work that has been done through Let’s Grow?’’

Michael Morris: Described how Chirton Engineering had successfully applied twice for RGF funds. “It has allowed us to grow from a small company working in 500 sq ft to 62 employees with 50,000 sq ft. The most important thing for us was the acknowledgement from the powers that be that we are doing something correct, which gave us the confidence to carry on with that we were doing.’’

Sue Houston: Explained that her key role in BIS is business engagement and skills across

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the North East.

Neil Warwick: Told the meeting that his specialism at Square One Law was EU competition with an emphasis on European Structural Funding. He said he was interested in how the positive story of Let’s Grow could be reconciled with the EU statement that there should be no more grant funding.

John Cuthbert: “There are some companies doing some really great things. Being in a position to be able to support some of those businesses take the next step in their growth has been tremendous.’’ He added that a guiding principle was that: “You should never give anybody anything for nothing’’.

Brian Aitken: Said that one of the most satisfying initiatives he was involved in at his time on The Journal was Let’s Grow.

Alastair MacColl: Outlined why he thought Let’s Grow was and is a good programme. It was a remarkable achievement to unite BE Group, Trinity Mirror, UNW, the LEPs, two universities,

Brian Aitken – former editor of the Journal. MD at Brian Aitken Associates Sue Houston – assistant director at BIS Yorkshire Humber and North East Michael Morris – business development manager Chirton Engineering David Rose – executive chairman FuDa International Trading (Hobart Rose) John Cuthbert – chairman Let’s Grow investment panel Colin Bell – business growth director North East LEP Phil Hourigan – director of corporate banking – future Williams & Glyn team, RBS North East England/NatWest Scotland Neil Warwick – partner Square One Law Stephen Catchpole – managing director Tees Valley Unlimited Alastair MacColl – chief executive BE Group David Greatorex – managing director Hydram Engineering Neville Bearpark – partner UNW LLP Venue – Seaham Hall

BQ is highly regarded as a leading independent commentator on business issues, many of which have a bearing on the current and future success of the region’s business economy. BQ Live is a series of informative debates designed to further contribute to the success and prosperity of our regional economy through the debate, discussion and feedback of a range of key business topics and issues.

12 local authorities and the Government with one purpose. By the time Let’s Grow reaches its conclusion, scheduled for the spring of 2017, it would have received and distributed about £57m from central government RGF money, would have worked with about 200 businesses, leveraged about £300m worth of private sector investment and should have created a minimum of about 5,300 jobs. He added: “The numbers are impressive in themselves but there are four things which for me are important. The first is the fact that it’s delegated money and that’s important because it allows us to target that money at strategically important businesses in strategically important sectors. Secondly, it’s money that

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LIVE DEBATE bqlive.co.uk

“Through Let’s Grow a Government investment of £57m has returned nearly £200m in PAYE and National Insurance’’

allows us to de-risk investment up to a point in high potential projects and projects that carry an element of risk. It has only ever been seen as part of a mix of financial instruments that might include bank debt and non-traditional forms of finance. It’s often been that extra bit of money that has made a project possible, or possible more quickly, or has given a project much greater scale. The third is that it’s simply great value for Government.’’ He pointed to calculations which showed that over the five years of Let’s Grow the Government’s investment of £57m had returned just under £200m in PAYE and National Insurance from the jobs created. “That’s not a bad investment.’’ Finally, he pointed out that whereas unemployment in the South East is under 4%, in the North East it all almost double that rate. “For all those very good practical reasons Let’s Grow is making a great contribution and could in the

future.

Brian Aitken: “How important was capital grant fund delegation?’’

Stephen Catchpole: Said it had been important to be able to target sectors. He also argued that the end of Let’s Grow was not the end of grant funding, that on Teesside there was still the SSI fund and other possibilities, although he conceded that these would be on a much smaller scale. He added: “I think Let’s Grow has been a fantastic success but, firstly, I don’t see this Government changing its mind. It’s what you do with the other access to finance instruments to make them more useful to SMEs. Second, you could argue that an absence of grant in Cambridge is what has led to the establishment of certain sectors and companies, which has led to far less unemployment than there is up here.

There comes a point in time – and I would say

we haven’t reached it yet – where the North East should not have to rely upon grant. Generally, most of the successful parts of the country do not have the same sort of access to grant.’’

Brian Aitken: Pointed out that the investment panel could not make a grant if the investment was going to be made anyway. So surely Let’s Grow made a difference?

John Cuthbert: Paid credit to Government for listening and funding Let’s Grow and to agreeing to the delegated model. He said Let’s Grow did not breach his “never give anybody anything for nothing’’ principal because it was contingent upon clear and measurable outcomes and it was to meet an identified regional challenge around creating jobs. “Other than that, we have flexibility around how that fund is deployed for maximum benefit and therein lies one of the other advantages of Let’s Grow – it’s a

LIVE DEBATE bqlive.co.uk

competition. So all the time, we are trying to gauge the relative merits, strengths and value creation.’’ He agreed that grants were only given where needed. “Let’s Grow should be the funder of last resort. It is very much a case of helping support those projects which otherwise wouldn’t happen.’’ He cited the amount of private sector investment leveraged by the grants and the grant per job ratio which compared favourably to the national rate and underlined that the PAYE and NI contributions from the jobs created gave the Government a pay-back period of between two and three years. In approaching government it should be argued that Let’s Grow was more of an investment than a grant. He agreed that there was a jobs challenge in the North East and said there was a need to rebalance the economy with a stronger private sector. “Jobs are being created and companies are growing and becoming more confident so it’s a virtuous circle.’’

Brian Aitken: Asked David Greatorex what difference grant funding had made to Hydram Engineering.

David Greatorex: Argued that the total amount of RGF funding was tiny in terms of public spending and was a political gesture. He also said that the pay-back in NI and PAYE on his company’s grants, and only on the additional jobs, was two years. “The Regional Growth Fund for us has been excellent, it’s been accessible, I’ve been able to speak to people who understand business and what we are trying to do. We wouldn’t have done what we have done without that support. Would we have done it in five years? Yes, we may have eventually got there.

Something like this just gives you the confidence to do it. It certainly accelerated our growth. Is it necessary? Without it we would certainly still be a growing business and we would still be doing OK. Many other businesses that could benefit from it and, if we cut off all funding of that type in years to come I think it will have an effect and it will have more of an effect in the North East than it will in Cambridge. Should we have it? I don’t know, it certainly benefited us and I would like to see some kind of support continue.

High tech companies get support through R&Ds, through other grants, through other funding, farming in the past has had support, fishing in the past has had support. It’s not unique and, from a manufacturing perspective, we are competing in a global market and there is support for manufacturing in other countries.’’

“Jobs are being created and companies are growing and becoming more confident’’ He said he liked the way Let’s Grow had been delivered and would not like to see a similar scheme administered by a large, bureaucratic regional body where much of the fund would be taken up in administration costs.

Brian Aitken: Asked Sue Houston whether BIS had seen Let’s Grow as agile in getting funds to the right recipients.

Sue Houston: “The simple answer to that is, yes.

When the case was first put, it was recognised that there was a need, this region is very different to Cambridge.’’ She said the evidence was there that the grants had made a difference which had led to the second tranche of the fund and had prompted the creation of a similar fund for Teesside in the wake of the SSI closure with the same panel.

David Rose: Said the debate should be asking whether the region needed any grants.

“Essentially companies that are looking for grants to get business moving are doing so obviously because they need the finance which they can’t get from traditional sources because the banks won’t give them any.’’ He added that in addition there were larger companies which are skilled at searching out and applying for grants but don’t really need them. However there are companies who are genuinely not able to go ahead with a project without grant funding and Let’s Grow

23

has been successful in assisting them. He said he remembered that in November 1979 the bank rate was 17% and with today’s interest rates “any company that’s worth its salt should be able to live on the cost of borrowing’’.

Brian Aitken: “Although companies do still complain that they can’t get the loans.’’

Phil Hourigan: Said that in 2015 his team in the North East and Scotland lent 50% more than in 2014. “More people were asking us for funding and I was impressed by the way we were able to support some businesses to the extent of 100% finance.’’ He added the bank’s lending criteria hadn’t changed significantly. He also said that his team had experience of a couple of cases where investments would not have gone ahead without assistance from Let’s Grow.

Alastair MacColl: “Our experience has been that most of the businesses that have benefited from Let’s Grow are also accessing bank finance.’’

Neil Warwick: “It’s clear from what everybody is saying around the table that Let’s Grow has been successful and there’s an undercurrent of `let’s lobby Government to extend this’. I think that’s pushing water uphill under the current regime and against the backdrop of the European Commission Common Strategic Framework which says grant assistance throughout Europe has to be gone by 2020. To go, even with the success story you have got, and say Let’s Grow has been good, let’s extend it, you are probably wasting your breath. But, I think you can extend it using different language and playing to different agendas.’’ He explained that devolved tax powers could provide an opportunity to raise revenue for such purposes.

Stephen Catchpole: “The question is: should there be future grant investment in the North East? Then you’ve got to say: why?’’ He argued that it was always possible to find companies which had done well out of grants, but this was equally true of other parts of the UK. He agreed with Neil Warwick that it was necessary to come up with a positive message for Government to differentiate the North East and justify it having a grant regime. Enterprise zone and devolution funds for the LEPs and Combined Authority might be used for grant schemes, though on a smaller scale, but he added: “What is there structurally about the economy up here that needs that when other parts of the country could point to companies that would do well with grants? Why is it systematically a

24

LIVE DEBATE bqlive.co.uk

necessity here, unlike other parts of the country?

Let’s Grow has been a fantastic success and I don’t think the North East is ready to lose it but the case has to be made in a different way.’’

Brian Aitken: “But the talk around the table has sometimes been about grant rather than investment. Is that the kind of language change you are talking about, Neil?’’

Neil Warwick: “Absolutely.’’

David Rose: Suggested that the majority of private companies looking for an investment no longer rely on bank overdrafts because of the security – often in terms of personal guarantees – required. Means such as trade finance and invoice discounting have replaced overdrafts.

Asset finance is also important in some cases. A combination of these could leave a small element of gap funding.

Michael Morris: Described how, when Chirton’s turnover was around £1.7m with 11 employees, it was faced with the decision as to whether or not to go for growth but RGF support enabled the business to reach the point it has today.

Brian Aitken: Asked whether there were other facilities available to allow businesses to fulfil their ambitions and break out of their current situation.

Colin Bell: “Picking up on the point about policy being against grants, funds that have traditionally gone into grants haven’t evaporated but there’s more encouragement to put them into a type of loan finance. Is there a way of structuring that type of product to still give that incentive? What type of product can give companies headroom?’’

Neville Bearpark: “It’s very easy to talk about the successes of Let’s Grow, and, let’s not forget, there are other versions of Let’s Grow in other regions. There aren’t many companies that argue against grants, it’s the cheapest form of finance you can ever get. The fact is, the regime is against us and there will be less and less funding available for grant schemes. We need to be a lot cleverer in the way we deliver grant schemes and we probably need to be a lot more selective.’’

He explained that part of the Let’s Grow process was to establish whether a business really needed a grant but that he suspected there were businesses which were sophisticated and experienced enough to get support for projects which would have gone ahead anyway. However, there were other examples where the grant had genuinely made a difference. “In the future we need to be much more focused on specific

“The regime is against us. There will be less funding for grant schemes.

We need to be cleverer’’

areas and be much more selective.’’ He also said that the possibility of grant support was critical to potential large inward investors looking at a region. The prospect for offering such grants was under threat for the North East, whereas they could still be available in Scotland or Wales.

Colin Bell: “That is an issue, it isn’t a level playing field.’’

Sue Houston: Said the Secretary of State feels decisions about economic recovery and how to create growth should be made at local level.

Local people have a better understanding of their economies than civil servants in Whitehall, so LEPs should be allowed to work with local businesses to drive economic recovery.

Brian Aitken: Asked Sue Houston if she could envisage a Let’s Grow type partnership bidding to the LEPs for funds to help SMEs. Sue Houston: “Potentially, it depends how the LEPs determine the use of the funding coming to them through devolution.’’

David Greatorex: Asked what was different

LIVE DEBATE bqlive.co.uk

“Why doesn’t our region function as it should without assistance. Would it function fine without assistance’’

about the North East. There were issues particular to the region, such as property, skills and infrastructure. “Why does our region not function as it should without assistance? Would it function fine without assistance? This leads to a discussion on the region and that leads to a discussion on devolution.’’

David Rose: Said that historically the driver behind grants had been employment which means the process has been driven by politics.

Brian Aitken: “There seems to be a consensus

that we should move away from grant funding and yet a recognition that our region differs from the rest of the UK when it comes to unemployment.’’

Alastair MacColl: “I wouldn’t necessarily go along with moving away from grant funding.

Where does this Government want to get to?

We have mentioned the Northern Powerhouse and rebalancing the economy North and South as a major aim and encouraging growth as a major aim. If you start from that point, and

25

ask pragmatically how do you do that? You do it by investing in infrastructure, in transport across the North and connectivity and skills and ultimately you also need to encourage companies and give them that extra confidence to invest.

If that means having financial instruments to do that – it could be non-traditional forms of lending or some of the schemes that have been set up LEPs. I think Neil’s absolutely right, it’s the `grant’ word that provokes a reaction. I think if you have progressive programmes based on investment and the kind of returns we have been talking about in terms of private sector leverage of five or six times and the PAYE pay back, then I think that’s a very different proposition. Unless you’re an absolute purist or ideologically driven, why wouldn’t you do that as part of that mix of things, at least for a period when it’s required where it serves a purpose and where it has been proved to work?’’

David Greatorex: Argued that using job creation as a metric for aid could disqualify some high risk projects. “I would argue that’s the wrong focus, if you get lots of other things right the jobs come. To be competitive, we’ve got to bring in more automation but eventually if you grow you do increase your workforce and usually you get higher skills levels and longer term jobs and a much more sustainable business because it’s much more competitive.’’

Sue Houston: “And there might be more jobs in your supply chain. We want to support innovation and we know that might mean fewer jobs, but increased skills levels, higher productivity and potential knock-on effect into the supply chain where there may be further growth. Things have evolved in the period since we first had Regional Growth Fund.’’

David Greatorex: Said he would be concerned by “a return to the bad old days’’ when grant funds were disbursed by “a plethora’’ of local authority bodies and other organisations often in insignificant amounts. If money were given to a new devolved regional authority, down to what level would it then be disbursed? He feared areas within the region would then compete for the available funds. He added: “The reason I’ve liked the way Let’s Grow works is that it hasn’t been caught up in those politics.’’

John Cuthbert: Emphasised the need to be focused with clear objectives and hold people to account which is what Let’s Grow with its focus on jobs did. He pointed out that Let’s Grow had

26

LIVE DEBATE bqlive.co.uk

“It’s virtually impossible to get a grant for the professional services sector - the most successful part of the North East economy”

no geographical constraints within the region and its grants were spread across the North East because deserving projects were. “Pure simple focus, it was all about high quality applications creating high quality jobs.’’ He argued that the region should not approach the Government with a begging bowl but with a programme for such clear and focused interventions.

Stephen Catchpole: “My heart tells me it would be really good to continue. My head tells me you have to put it in the context of making an argument to Government. I think generally that the business community – certainly in the Tees Valley – is more sophisticated than five years ago.

The squeezing out of public sector jobs, whilst very painful, is arguably something that will boost the economy over a period of time. You’re right the simplicity of Let’s Grow was that it was just about creating jobs because we had been hit by a recession in the worst area for employment.

That wouldn’t necessarily be the criteria for any future gap funding scheme because we’re not at that position anymore.’’ He argued that any future gap funding would need a much clearer focus as to its purpose. The Government could get a greater return for its money by investing in other regions.

John Cuthbert: “That runs contrary to the strategic objective of rebalancing the economy.’’

Stephen Catchpole: “If that’s your argument you’ll not be letting every job [creation] application be your criteria because you’ve got to be saying to the Government, `it’s about strategic rebalancing, these are the industries or types of companies.’’

Neil Warwick: Observed that it was virtually impossible to get a grant for the professional services sector and yet professional services were the most successful part of the North East economy. He added: “Two of the most successful companies in the region are Go Ahead and Arriva and they have never had a single grant.

So it is possible to be successful in the North East without grant assistance. So there needs to be some sort of evidence to say why manufacturing needs that help.’’ He asked grant recipients whether they would have still taken the money had it been a loan rather than a grant.

Michael Morris: Said the red tape would probably have deterred his company.

David Rose: Also said he doubted they would have taken the loan route.

David Greatorex: Said his business was traditional in its approach to funding and he

doubted it would have taken an extra element of loan.

Alastair MacColl: Asked Stephen Catchpole what a replacement for Let’s Grow might look like.

Stephen Catchpole: Said the aim of any scheme would be simply to provide a stimulus. “The difficult bit is the bigger picture stuff as to why you are doing it. Any company in any part of the country could expand more quickly if they get free money. Why should this area have that opportunity? That is where you come back to saying there are underlying structural issues which I’m very nervous about because that’s much more the old style North East saying it needs outside help. Or it’s something that says if the Government is true to its word in wanting to see more of certain sectors, then we are ideally placed to have those sectors, therefore there is an investment which needs to be made and grant plays a part in that. It’s that top level narrative that says why we want it.’’

Alastair MacColl: Asked Sue Houston whether Government policy was still jobs and growth.

Sue Houston: Explained government policy has evolved, partly because of economic circumstances and partly because of a

LIVE DEBATE bqlive.co.uk

new Business Secretary who favoured less intervention. He also favoured local initiative rather than central Government action.

Colin Bell: “What I’ve been listening for tonight is those specific occasions where something was unlocked that wouldn’t have happened or where someone did something really special that wouldn’t ordinarily have happened. I take the point that things may have happened at a quicker pace. Is it a strong enough argument? Surely out of the 200 companies you have supported there are some stories to be unearthed?’’

John Cuthbert: Remarked on the diversity and range of companies, at varying stages of development and in different sectors from startups to long established businesses and multinationals which had been assisted by Let’s Grow.

He added: “That’s where I get slightly concerned about the stock picking idea of selecting sectors.’’

Let’s Grow had not focused on particular sectors.

“If we had done that and bet big three years ago on subsea we would have started to feel a bit uneasy now wouldn’t we? Not because of what those companies have done but because the world has moved on. Let’s Grow has almost been a portfolio. I worry because the UK’s track record in terms of picking winners across the industrial sectors hasn’t been brilliant, so I’d be hoping for a much more broadly based intervention of some kind but I accept the current system is going to have to change, we can’t argue for more of what we’ve got, we’ve got to think of different ways of doing it.’’

Brian Aitken: Canvassed views from around the table for concluding thoughts and particularly any ideas for the way forward for investment.

Neville Bearpark: “I don’t think we do have a clearer idea. We have a very clear idea of what we have achieved to date and we have all contributed in some way to helping the region.

It’s such a changing environment at the moment and we have to come up with new ways of doing things and not just more of the same. We’ve got to change the way we deliver support.’’

David Greatorex: Said he was not any clearer either. Statistics pointed to the value and success of Let’s Grow. The North East economy was growing and diversifying but issues remained. He asked: “Is it time for the North East to go it alone without any support from London? I don’t know that for sure. These are turbulent economic times, so it’s a high risk strategy.’’

Phil Hourigan: Said it had been a worthwhile

27

“A way forward might be to adopt the exports agenda and create a financial agenda’’ debate but wasn’t sure what the way forward was.

David Rose: “We don’t really need a grant environment, we want to direct that funding in the direction of schools.’’ He said teachers should be impressing on their students the breadth of opportunities available and more apprenticeships at all levels should be made available. There should also be a recognition of the importance of manufacturing.

Stephen Catchpole: Expressed “grave doubts’ that Government would repeat Let’s Grow on the prospect of job creation. “I think there needs to be a narrative about what we are trying to achieve and why we are trying to achieve it.’’ He said it was possible to argue that the North East economy has become more robust because it had a bigger service sector. Manufacturing only represented 12% of the region’s economy and, in terms of jobs, was shrinking. Within the new economy, however, it was possible to identify sectors which should be supported.

Alastair MacColl: Said Let’s Grow was right for its time but times had changed. He said he believed there was still a need for some kind of financial instrument and that the North East still needed some help to close the gap with the South.

Colin Bell: Agreed that the world had changed and that innovation and adaption were necessary

to address issues.

Michael Morris: Emphasised the importance of skills and education and of changing parents’ perceptions of engineering as a career.

Sue Houston: “We obviously haven’t got the answer tonight but I think it’s good that we had this group talking about this, airing the challenges, identifying some potential ways forward. I would encourage you just to continue having the conversation.’’

Neil Warwick: Suggested that a way forward might be to adopt the exports agenda and create some kind of financial instrument in place of grants creating “something that looks different but is almost identical to what we’ve got’’.

John Cuthbert: “I don’t think we are going back to the begging bowl, this is all about the region playing its role in the national Government’s agenda and we’ve just got to find ways of articulating our propositions so that they tick the relevant boxes. There is still potential in the North East economy. There are still companies out there developing projects, some of which, without some sort of support, won’t go ahead or will be pursued at a lower scale or over a longer timescale. If we are to maintain the momentum in the North East economy there’s a strong argument to produce some kind of package and help to deliver that change.’’ n

16 18 45 59 75 Ponteland

XY TXCRXYX

28 A69

A696

bqlive.co.uk

Wylam

Tynemouth South Shields

Newcastle upon Tyne

Prudhoe Stocksfield

Monkseaton

1 4 14 15 17 46 49 54 73 888994 Jesmond

South Gosforth

A69

Corbridge

Hexham

3 6A1913 23 7172 90

Whickham

405766 85 32 39 40

1112 30 3748 5051 A1300 Whitburn A194 A184 64 77 Cleadon Gateshead 353644 55 56 A194(M)19A1929A1231 6063 657079 93 A1

STAGE ONE: The first ÂŁ27m created 2501 jobs across the region

Sunderland

South Washington

A692 A68

A1018

Chester-le-Street A690

A19

A167

A1(M) 8 9 2225 2633 42 43 4762 6768 69 7478 8283 Durham 92

A691

A167

2 58

A179

A1(M)

A68 A66

A66

Wynyard

61 76

5 10 2127 31 34 38 80 87 91

7 20 28 24 53 81 84 85

Redcar&Cleveland

A167

COMPANY NAME LOCAL AUTHORITY A66 SECTOR A1150

A67 Eaglescliffe 1. 4Projects Newcastle Darlington Digital & media A66(M) 2. Able UK Hartlepool Engineering Yarm 3. ABS Precision Limited North Tyneside Engineering A1(M) 4. ADM Pressings Limited Newcastle Engineering A66 5. Agile Group Redcar & Cleveland Digital & media HuttonManufacturing Rugby 6. AIS North Tyneside 7.

8.

9.

10.

11.

12.

13.

14.

15.

16.

17.

18.

19.

20.

21.

22.

23.

24.

25.

26.

27.

28.

29.

30.

31.

32.

33.

West Hartlepool

A689 A688

A68 A688

A19

CONTRACTED A174

CONTRACTED TOTAL GRANT JOBS Nunthorpe 35,000 78 700,000 60 A171 60,000 7 Great Ayton 440,000 58 Stokesley 190,000 35 250,000 22 A172 Almit Group Darlington Chemicals 410,000 40 A19 Altec Engineering Durham Engineering 325,000 33.5 Appletree Joinery Durham Manufacturing 50,000 7 Applied Graphene Materials Redcar & Cleveland Manufacturing 53,000 2.5 Aspire Gateshead Digital & media 220,000 17 Axon Energy Products Gateshead Engineering 300,000 14.5 Barrier Group North Tyneside Manufacturing 164,000 60 Bede Gaming Newcastle Digital & media 169,400 20 BEL Valves Newcastle Manufacturing 800,000 81 Bespoke Concrete Products Northumberland Manufacturing 55,000 18 Brush Technology Newcastle Manufacturing 50,000 4 Calibrate Inc. Ltd Northumberland Energy 57,200 6 Calsonic Kansei Sunderland Manufacturing 660,000 70 Cambridge Research Biochemicals Stockton Pharmaceuticals 65,000 6 CatalySystems Redcar & Cleveland Engineering 64,000 7 Chemtech Environmental Durham Chemicals 200,000 21 Chirton Engineering North Tyneside Engineering 200,000 33 Coatsink Middlesbrough Digital & media 50,000 6 Compound Photonics Durham Engineering 3,000,000 174 Consett Popcorn Durham Food & drink 70,500 7.5 CorDex Instruments Redcar & Cleveland Manufacturing 125,000 23 Cotswold manufacturing Stockton Manufacturing 85,000 10 Desco Ltd Sunderland Engineering 96,000 12 Donwood Gateshead Manufacturing 70,000 11 Dormor Machine & Engineering Co Redcar & Cleveland Manufacturing 70,000 10 Durham Sheet Metal South Tyneside Manufacturing 100,000 20 Dyer Engineering Durham Engineering 563,000 72

34. Elring Klinger 35. Encore Packaging Solutions

XYXTCRZXX

Redcar & Cleveland

Manufacturing

Sunderland

Manufacturing

720,000 57 220,000

bqlive.co.uk

29

22

36. Expert Tooling & Automation Sunderland Engineering 300,000 25 37. Express Engineering

Gateshead

Engineering

631,000

38. F J Booth

Redcar & Cleveland

Engineering

160,000 16

50

39. F M Coatings

South Tyneside

Chemicals

76,000

40. Filtrona

South Tyneside

Manufacturing

1,000,000 262

31

Manufacturing

285,000

41. FuDa International Trading

North Tyneside

42. Furniture Clinic Ltd

Durham Manufacturing 79,800 26

43. Greencroft Bottling

Durham

44. Griffith Textile Machines Limited Sunderland 45. Horizon Products Ltd

Northumberland

Food & drink

800,000

90 75

Manufacturing 200,000 19 Chemicals

152,000

46. Houghton International Electrical Services Ltd Newcastle

Manufacturing

100,000 12

13

47. Hydram Engineering

Durham

Engineering

160,000

48. International Paint

Gateshead Chemicals 255,000 31

17

49. International Syalons

Newcastle

Engineering

120,000

50. IT Professional Services

Gateshead

Digital & media

242,000 25

51. It's All Good

Gateshead

Food & drink

417,744

52. J & B Recycling

Hartlepool Recycling 300,000 52 Manufacturing

125,000

17 55

53. Jalna Construction

Middlesbrough

54. JHT Fabrications

Newcastle Manufacturing 55,000 9

12

55. Lear Corporation

Sunderland

Manufacturing

540,000

56. MAC Trading

Sunderland

Tourism & hospitality

50,000 5

57. MCPS

South Tyneside

Manufacturing

250,000

58. Merlin FlexAbility

Hartlepool Engineering 80,000 9 Manufacturing

23

59. Metano Ltd

Northumberland

60. MI-King

Sunderland Engineering 400,000 38 Engineering

168,000

111

275,000

14

61. Modus Seabed Intervention

Darlington

62. Oceantec Marine

Durham Engineering 60,000 8

22

63. OpSec Security

Sunderland

Manufacturing

250,000

64. Orchid Software

Gateshead

Digital & media

355,000 38

29

65. Pacifica

Sunderland

Out sourced services

250,000

66. Phoenix Steel

South Tyneside

Manufacturing

200,000 26

67. Prima Cheese

Durham

Food & drink

100,000

68. PSI Global

Durham Manufacturing 325,000 62 Manufacturing

95,000

45 10

69. PSP Architectural

Durham

70. Rokshaw

Sunderland Manufacturing 75,000 9

17

71. Rosewood Manufacturing Company

North Tyneside

Manufacturing

50,000

72. Roundel Manufacturing

North Tyneside

Manufacturing

120,000 14

73. Siemens PLC

Newcastle

Engineering

366,000

74. SONE

Durham Manufacturing 250,000 68 Digital & media

50

75. Specialist IT Services Group Ltd

Northumberland

76. Subsea Innovation

Darlington Engineering 400,000 36 Digital & media

120,000

7

90,000

13

77. Superkrush Films

Gateshead

78. T & G Automotive

Durham Manufacturing 195,000 28

11.5

79. Tadea

Sunderland

Training

114,750

80. Tees Components

Redcar & Cleveland

Engineering

400,000 37

9

Engineering

240,000

81. Teescraft Engineering

Stockton

82. Tekmar Energy

Durham Engineering 210,000 27

83. Thorn Lighting

Durham

84. Tracerco

Stockton Manufacturing 1,000,000 69

Manufacturing

500,000

31 91

85. Trade Interchange

Stockton

Digital & media

76,000

86. Tyneport Coatings

South Tyneside

Manufacturing

76,000 14

8

87. Typhoon International

Redcar & Cleveland

Clothing & textiles

60,000

88. Ubisoft EMEA

Newcastle

Digital & media

300,000 45

22

89. Ubisoft Reflections

Newcastle

Digital & media

182,866

90. W D Close & Sons

North Tyneside

Engineering

370,000 45

20

91. Ward Recycling

Redcar & Cleveland

Recycling

500,000

92. Wear Referrals

Durham

Veterinary service

312,000 30

84

93. Wessington Cryogenics

Sunderland

Manufacturing

100,000

94. Wylam Brewery Ltd

Newcastle

Food & drink

180,000 14

29

O V E R V I E WA1

30

Amble

bqlive.co.uk

A1068

STAGE TWO: committing to another ÂŁ30m in grants and creating 3000 further jobs

Morpeth

A696

3 26

A1

NORTHUMBERLAND

A68

Ponteland

A19

NORTH TYNESIDE

A696

Tynemouth South Shields

11 38

Jesmond

Wylam

Newcastle upon Tyne 1 16 2045 A1300

Prudhoe Stocksfield

46 48 19 32Monkseaton

10 23

South Gosforth

A69

Corbridge

43

A189

Whickham

A1

Whitburn

A194

A184

41 42 44

Gateshead

Cleadon

A19 A194(M) 13 14A1231 28

Sunderland

South Washington

A692 A68

Chester-le-Street

A1018

A690

4 A167 2 5A1(M) 6 9 12 15 17 18 29 30 33 35

A691

37

Durham

A19

4047

A167

34

A179

A1(M)

A68 A66

A19

A689 A688

Wynyard

39 36 25 22 8

A167

31 A1150 A66(M)

7 27

Redcar&Cleveland

A174

A66

Eaglescliffe

Darlington

A67

21 24 Middlesbrough

A68 A688

A66

West Hartlepool

Nunthorpe

Yarm

A171

Great Ayton

OVERVIEW bqlive.co.uk

COMPANY NAME LOCAL AUTHORITY

CONTRACTED TOTAL GRANT

CONTRACTED JOBS

1.

Precision 2000

Gateshead

£50,000 7

2.

Intelligent Packaging Solutions

Durham

£90,000 12

3.

Omega North East

Northumberland

£200,000 20

4.

A Tech fabrications

Durham

£81,000 7

5.

Clayton Glass

Durham

£300,000 38

6.

EOS Facades Ltd

Durham

£110,000 10

7.

Cleveland Profiles

Middlesbrough

£50,000 5

8.

Country Valley Foods

Stockton

£185,000 30

9.

WV Associates

Durham

£55,000 22

10. Molekula Ltd

Newcastle

£250,000 28

11. Advanced Cutting Tools

South Tyneside

£75,000 9

12. Tricogen

Durham

£125,000 16

13. SaleCycle Ltd

Sunderland

£350,000 34

14. MCC Media

Sunderland

£63,000 12.5

15. Nicholsons Sealing Technologies

Durham

£680,000 65

16. Henry Colbeck

Gateshead

£105,000 11.5

17. The Great Annual Savings Company Ltd Durham

£400,000 89

18. Glassfibre Flagpoles

Durham

£100,000 12

19. Connect Physical Health Centres

North Tyneside

£250,000 50

20. Sevcon

Gateshead

£400,000 20

21. Titan Trailers Industries Ltd

Redcar & Cleveland

£200,000 22

22. Barrier Architectural Services Ltd

Stockton

£65,000 30

23. Echo U

Newcastle

£290,000 128

24. UK Docks Marine Services North Ltd

Redcar & Cleveland £100,000

13

25. Protherm

Stockton

26. D-Line Europe

Northumberland £90,500 20.5

£140,000 12

27. Midas Cladding

Middlesbrough

£65,000 16

28. TKT Cosyfoam

Sunderland

£100,000 51

29. Mold Systems Ltd

Durham

£140,000 21

30. Surtec NE Ltd

Durham

£105,000 10

31. Paragon Rapid Technologies Ltd

Darlington

£140,000 14

32. Accenture

North Tyneside

£1,850,000 486

33. Saxon Fabrications

Durham

£50,000 5

34. Exwold Technology Ltd

Hartlepool

£200,000 20

35. Mobile Rocket

Durham

£61,500 8

36. RMS Solutions

Stockton

£100,000 12 £160,000 18

37. Agricore

Durham

38. HVR International

South Tyneside £300,000 29

39. Tom Walker & Sons

Stockton

£102,000 12

40. Hydram Engineering

Durham

£355,000 36

41. Choice Future Planning

Sunderland

£400,000 104

Sunderland

£105,000 9

43. Dickinson's Furniture

Northumberland

£72,000 14

44. Saggezza

Sunderland

£950,000 85

45. Gate 7

Gateshead

£135,000 12

46. Gavurin Ltd

North Tyneside £190,800 27

42

Big Solar

47. Dunlop BL Limited

Durham

48. BLP ( Northern) Limited

North Tyneside £70,000 13

£250,000 60

31

32

INTERVIEW bqlive.co.uk

INTERVIEW bqlive.co.uk

It began as a husband and wife operation run from an office above the library in the County Durham village of Lanchester.

Now Lanchester Wines is a group of companies which has become a major player internationally in the bottling and wine importing industries.

According to Mark Satchwell, managing director of one of the group companies, Greencroft Bottling Company, it is now one of the largest bottlers of wine in the world and the second largest in the UK, packing, on average, around 2.5 million bottles a week.

“And we would hope to see that grow by as much as 40% over the next 18 months,’’ he adds.

As a contract bottler of wine, Greencroft’s serves other companies in the group, such as Lanchester Wine Cellars and Lanchester Wine Sales as well as 44 external customers, whose wine comes in road tankers for bottling. These range from major international brands such as Australian Vintage, Sileni, or Wither Hills to small own-label customers.

“It ranges from tens of millions of litres down to customers that probably only pack maybe three or four tanks a year,’’ says Satchwell.

Now the group has an annual turnover of around £80m with up to 450 employees.

Greencroft Bottling accounts for about half the group turnover and about 60% of the workforce.

This makes Lanchester Wines a major player but it has ambitions to be even bigger.

“We bottle, on average about 2.5 million bottles a week and we would hope to see that grow by as much as 40% over the next 18 months,’’ says Satchwell.

The business plans to expand its site on the Greencroft Industrial Estate in Annfield Plain, County Durham. The new site, adjacent to the old one, will be some two and half times larger and work will begin this year for completion next year.

“That will enable us to look at other types of product to pack and it should create between 50 and 100 jobs,’’ he adds.

More of its bottles are destined for European markets and the development of Teesport is “hugely important’’ to Lanchester Wines, which, as a group, is ready to take advantage of opportunities for growth as they present

We had the bottle to grow for it Let’s Grow has helped companies in a range of exciting sectors, including one County Durham company which has built an international reputation. Peter Jackson reports

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“X7x6crx7trc txr ctrxcyx yctuuyxtc yuxt cyutx cyutxcyutx cxytuc yuxtc yuxt cyuxtc yuxtcyuxtc uxytcyuxt cuyxt cyutx cyutx cytxyctxuyct yctuxuxc’’

themselves. We have a relatively small board, a board that has experienced significant growth,’’ says Satchwell. “And we are always open to new ideas. That said, ideas have to go through the filtering process and due diligence but, if we feel it’s something that fits with what we do or might serve part of the group then I’m sure that a new idea may well be given wings.

“But now the projects are certainly becoming larger and so associated investments and risks are also much larger than they were 10 years ago.’’

The Lanchester Group is a collection of associated companies controlled by one main board. The principal shareholders are founder Tony Cleary and his wife Veronica. Greencroft Bottling was set up in 2003. Other group companies are Lanchester Wines, Lanchester Gifts, Lanchester Energy and Lanchester

“We’ve a relatively small board that has experienced significant growth.

We’re always open to new idea”

Properties. Since the original business, Lanchester Wine Cellars, was set up in 1980 - as a wine merchant and wholesaler supplying the on and off trade in the North East - its growth has been phenomenal. It developed a range of drinks and wines over the years to be contract packed by others. A 40,000 sq ft bonded warehouse was established in Philadelphia in County Durham and the company’s offices were above the library in Lanchester.

“At that stage the business learned all of the

processes surrounding bonding goods, holding things in duty suspense, et cetera, et cetera,’’ says Satchwell.

By the late 1990s the business was turning over about £7m a year. In 2000 the entire business was moved to its present site on the Greencroft Industrial Estate, occupying 80,000 sq ft. Three years later the bottling plant was set up.

It also acquired a business which produced the 187ml miniature wine bottles which are used by airlines from a company in Lancashire which

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had gone into administration. At about the same time the business was bottling single malt whiskies for export to Taiwan.

“It was on the 187s that we created our reputation for quality,’’ says Satchwell. “It’s always been a case of putting quality first and you work on your efficiencies thereafter and hopefully you end up with a quality product that’s being delivered at the right price. If you get those two things right, success follows.’’

And follow it did. The business grew and in 2005 started packing some branded products for Australian producer McGuigan Wines in the 187 format.

“Effectively we just grew our volumes and doubled almost every year,’’ says Satchwell. “The success of the bottling plant enabled the whole business to move forward.’’

It moved into the gift business, supplying wine and food gifts and hampers to internet based and high street retailers. Now it creates around 500,000 hampers a year and last year it acquired another gift business, Spicers of Hythe, a long established business that supplies customers such as Harrods.

Further investment saw the installation of wind turbines on the Greencroft site making it selfsufficient in electricity and in recent years the group has acquired a further 500,000 sq ft of warehousing space at three sites in Gateshead, at two of which it is installing ground source

heat pumps. The business’s growth has been impressive but success was never guaranteed.

Satchwell says: “In the time we have been in business we have seen several large plants created in the UK and, at the same time, we have seen numerous businesses fail at what we do in terms of contract bottling wine.

“But, there has been this commitment to investment, not only in plant but also in people and training and it’s that continuous investment and continuous improvement that has driven the business.’’

That investment was helped in April 2014 by the Let’s Grow programme. A grant for £800,000 was given as part of a total investment of more than £4.1m for new bag-in-box line, new filling lines and a blending plant creating 75 jobs.

“It’s great to get something back,’’ says Satchwell. “If you do put money in the right hands it can create wealth for others. It really does pay for bells and whistles and we have some great kit here now. It was very difficult

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when we started. What we now spend on a single labeller was our total initial investment because we didn’t have the money and possibly we started smaller than we should have done.

“But, I walk around the warehouses now and by the end of this year we’ll have in excess of a million square feet of warehousing. It’s absolutely phenomenal the amount of wine that moves through this place.’’

Phil Sly of BE Group, which administers Let’s Grow, says: “It was great to have been able to assist Greencroft Bottling/Lanchester wines with a Lets Grow grant for their project. It has been fantastic to see their plans unfold, they have invested in growth of the business and have increased their production and packaging capacity which has ultimately led to the creation of a large number of jobs in the area.

“It really is an impressive sight to see the factory in operation and to see what has been invested in and how Lets Grow has supported them defines what the grant scheme is all about.’’ n

“We’ve seen several large plants created and at the same time seen numerous businesses fail at what we do’’

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“We are very positive. We are vigorously pursuing new markets and getting good responses�

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Chirton Engineering used its Let’s Grow grant to ride out difficult market conditions and find new markets, as Peter Jackson reports

Grant got us where we are

Chirton Engineering secured a Let’s Grow grant which has been pivotal to the business coming through the recent difficulties of the oil and gas sector and finding new markets.

The North Shields-based company was one of the first to win a grant under the scheme which it used to buy state-of-the-art machinery, create jobs and diversify.

“Without that initial Let’s Grow support we wouldn’t be where we are today,’’ says business development manager Michael Morris.

The engineering business was founded by Paul Stewart in 2003 with just four employees in 500 sq ft premises.

It grew steadily to the stage in 2013 where it had 53 employees and an annual turnover of £3.6m.

At this stage the business applied to the newly formed Let’s Grow Fund for a grant to help it acquire new machinery.

“In 2013 we realised we were at the next stage and wanted to push on and meet the demands of the subsea oil and gas sector and further

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investment was needed,’’ says Morris.

Chirton successfully applied to Let’s Grow for a grant of £200,000 to help towards buying more than £1m worth of new machinery. Thanks to Let’s Grow, Chirton was then able to acquire state-of-the-art equipment.

“The grant enabled us to go for Rolls-Royce standard of machinery rather than Mercedes,’’ explains Morris. The investment also led to the creation of 16 jobs.

The collapse in the oil price over the past year has hit investment in the offshore sector and put a brake on Chirton’s growth plans but diversification is helping the company to weather the storm. Even though there was a downturn associated with exploration there was

still demand for safety components. Chirton also expanded into component manufacturing for manufacturers including McLaren as part of a strategy of collaborative innovation with its core customer base.

The company was also placed in a stronger position in 2014 when it was acquired in a £2.75m deal by Carlisle-based agriculture, food and engineering group Carrs Milling Industries.

Carrs, which produces farm products and ingredients for the ready meal and baking industries and had been searching for a business to complement its own engineering division, acquired the entire share capital of Chirton.

Chirton continued to be led by its existing management team, including managing director

Paul Stewart. Carrs backed its new acquisition with a further investment of nearly £1m in new machinery and a move into 50,000 sq ft premises on the Tyne Tunnel Trading Estate, up from 16,500 sq ft in its previous base.

It also brings great new opportunities in new markets for Chirton. Another Carrs subsidiary Bendalls Engineering, also based in Carlisle, has secured a set of multi-million pound framework agreements to supply Sellafield with complex components for some of the site’s most critical facilities. This has led to precision machining work being subcontracted to Chirton.

“It has opened doors within the nuclear industry supporting the framework bids that are already in place,’’ says Morris. The company, which last

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year had a turnover of £4.2m, is now bullish about its future.

“We are still very positive. We are vigorously pursuing new markets and we are getting good responses,’’ says Morris.

And the company is still appreciative of the help given by Let’s Grow.

“We needed that injection,’’ adds Morris.

“We could have got funding from banks but it would have held us back. We would still have achieved the things we wanted to achieve but it would have taken longer. Let’s Grow not only gave support to the business but we feel it was a recognition that we were doing something right and that if you do that there is support there to enable you to go forward. To get that

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It is not a company to rest on its laurels. It is constantly identifying different sectors to which it can bring its expertise and grow

recognition was very important to us because you can tend to think you are ploughing a lonely furrow doing a lot of unseen work, not just for the company but for the region.’’

Phil Sly of BE Group, which administers Let’s Grow, says: “Chirton is a fantastic company but it is not one to rest on its laurels. It is constantly

identifying different sectors to which it can bring its expertise and grow.

“It has been a very satisfying company to work with. The grant to Chirton is really the epitome of Let’s Grow: they were given the grant, made the investment, created the jobs and found new markets.’’ n

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Automate to build growth Let’s Grow was about creating jobs but, as Wessington Cryogenics shows, that hasn’t ruled out investing in automation, as Peter Jackson reports Wessington Cryogenics was a successful company regarded as a world leader in its field, so when it lost out on major orders in 2013, it rankled.

The Rainton Bridge-based company designs and makes specialist gas storage tanks. Its most popular product was its 10-foot isopak tank commonly used for the offshore industry, which had become the international standard, making Wessington global preferred supplier to oil giants such as Halliburton and Schlumberger.

Wessington also supplied the world’s largest leasing company.

But the company became a victim of its own success and had difficulty keeping up with this soaring demand in a volatile market which had to be met at short notice.

Director Gill Southern recalls: “In one year, even though the customers desperately wanted to do business with us, in one swoop over the summer we lost about £2.3m worth of orders to a French competitor. We lost it purely on capacity, you can only plan for so much. It’s about agility and it made us think that we needed to bring

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“If even one of the projects comes good it will lead to high volumes”

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technology into the company and start to automate.’’

The company was founded in 1984 to supply cryogenic pressure vessels primarily to the oil and gas industry but has also supplied sectors such as biomedical research and defence.

A cryogenic pressure vessel is a double-skinned, carbon and stainless steel tank ranging in capacity from half a litre to 100,000 litres to carry super cooled gases such as liquid nitrogen, helium, argon or liquid natural gas.

“They can be supplied to almost every single sector you can think of and have applications right across the board,’’ says Southern.

By 2013 It had grown to the point where it had about 130 employees. The loss of the contracts in that year and the realisation that it needed to invest in automation led the company to apply to the Let’s Grow fund to help with the necessary investment in the robot equipment to pilot automation. Wessington Cryogenics applied to Let’s Grow for, and, in 2014, received, a grant of £100,000 towards a £400,000 investment in a plasma arc profile cutting robot, an automated plasma arc seem welder and some automated rollers.

The business makes its products from sheet steel in a process which had been largely manual using highly skilled traditional fabricators, welders and platers. Despite the introduction of lean manufacturing techniques, this was a manual industry producing high quality products. With the new equipment, however, it could begin to introduce processes which revolutionised production of the complex and often customised tanks.

Southern explains: “Using the robot, we could just cut the holes in the dome ends of the tanks ready for the pipework to be fed in, which had previously been done by manual cutting and grinding. Just one process, which would usually take about an hour and a half was reduced by the robot to about seven minutes. Just doing that and using the automated rollers meant everything was speeded up and there were also significant quality improvements because everything is so much more precise.’’

These pilot improvements saved about 13 hours of labour per tank, where the total build time can be 28 days. This would be even more significant at peak production.

A primary aim of the Let’s Grow programme is to safeguard and create jobs in the region but

“The automation not only led to great efficiencies and high quality, it also fed into a plan already under way”

the introduction of robots is usually associated with putting people out of work. The wider significance of the Wessington project is that investment in such automation can be job creating. Southern says: “We were creating jobs.

Right from the outset the plan was never to shed jobs.’’

The automation not only led to greater efficiencies and higher quality, it also fed into a plan which was already well underway at Wessington Cryogenics to diversify its markets.

“About 50% to 60% of our business was all heading towards oil and gas and offshore and we very deliberately had already diversified and were already producing non-cryogenic tanks, mainly for those same blue chip companies, we also had more to offer them,’’ says Southern.

“We also wanted to find one or two strong new sectors to complement offshore and we have been on that journey for five or six years now. With the robot, people who were freed up from that area of production would be retrained and deployed on the other areas on specialist projects that we were being commissioned to develop.’’

One potential new market opened up by the automation is the cold chain. This is the temperature controlled supply chain, common in the food and pharmaceutical industries.

Currently these chains rely on heavy, mechanical refrigeration equipment.

There are initiatives underway to overhaul these. In the case of delivery to out-of-town supermarkets, for example, there is a problem in having produce delivered outside certain hours with environmental rules restricting the running of noisy, generator powered refrigeration units.

Wessington has developed a prototype nitrogen tank for the Dearman Engine project to develop an engine which runs on frozen liquid air.

The potential is huge as the ambition is for the replacement of all mechanical refrigeration for the food supply chain.

“A project born in the UK could have worldwide potential, it’s very scalable,’’ says Southern.

“There are other exciting developments in

food technology where people are seeking very innovative solutions in food processing, packaging and planning which could mean replacing large factories as we know them now with modular units which will revolutionise the industry. These clever systems that are being developed would mean huge environmental savings by being faster and cleaner. We are very excited to be a part of one of those projects.’’

For Wessington the possibilities are endless.

“Anywhere where we could think of laser profiling machined parts,’’ she adds. “What could we then cut and manufacture in-house that would previously need to have been subcontracted out?’’

For the Dearman Project the company has moved on from prototype to developing a trial unit.

“It has started to involve suppliers and it has started to involve third party customers, so, while it’s still at development stage, it’s very close to market technology,’’ says Southern.

“If even one of the projects comes good it will lead to high volumes and we have had to show we have the capacity and a plan in place to meet the kind of production batches we are expecting.’’

Inevitably, Wessington Cryogenics has been hit by the collapse in the oil price with the oil and gas industry scaling back projects and investments but, while its growth plans may have been slowed, its new equipment has given it confidence to face the future.

Simon Allen, Let’s Grow project manager says: “We were delighted to be able to support Wessington with their growth plans, particularly so as this was one of those rare investments involving both automation and new job creation. The automation has allowed Wessington to manufacture cryogenic vessels with a higher quality as well as widening their range to provide customers with a full suite of options. The investment will generate more work for Wessington overall, leading to both new and safeguarded jobs across the business.” n

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“Let’s Grow has supported 140 North East companies so far with grants of over £35m, helping create nearly 4000 permanent jobs.

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SIMON ALLEN, BE GROUP

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