Business Insight (North of England)

Business Insight Tuesday April 3 2012

ALICE in Wonderland

Innovation and imagination at Daresbury Page four

Mersey money

Liverpool: the stronghold of wealth management Page twelve

The only way is ethics The banker who might give bankers a good name Page eight

Tuesday April 3 2012 | the times

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Business Insight

Welcome

Innovation’s blend of daring and pragmatism

Moving from the

Innovation requires a fine blend of daring and pragmatism. In this issue we explore that balancing act with a leading banker who resisted the temptation to “fill his boots” during the general credit free for all.

Keith Alderson of the Co-operative Bank tells us why being “old school” has helped it weather the financial storm and expand its support for business customers. Having increased its share of the small and medium enterprises market significantly in the past four years, the Co-op anticipates doing the same again in the next four.

We find out about the Daresbury Science and Innovation Campus in Cheshire, which is now officially an enterprise zone. It is set to become a global centre for the commercialisation of science thanks to a 20-year expansion plan to create a “technology village” housing hundreds of businesses and up to 15,000 people.

We also take a look at the home of the UK’s largest wealth management sector outside of London: Liverpool. On a regional level, in 2010, the North West had almost £25 billion of assets under management.

Bankers have a major image problem after recent excesses.

But there are some companies which show there is another way of doing business

Inside ...

Technical innovation The Science and Innovation Campus at Daresbury Page 4

Cover story How the Co-op bank’s approach has helped it thrive Page 8 Personal Finance Wealth management in Liverpool and the North West Page 12

Mike Cowley at large

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hen the news broke of the allegation that Goldman Sachs bankers often referred to their clients as “muppets”, it was yet another breach in the PR dam that had been hastily erected to keep back the toxic tide since the crash of 2008.

It was said to mark yet another milestone in the bank’s slide in terms of ethical standards – which simply prompts the question: “What ethical standards?”

Are these the same ethical standards that saw multi-million-pound bonuses awarded and taken by certain bank bosses at a time when the Government is trying to convince us “we are all in it together”?

If we are all in it together, perhaps someone should tell the young London city trader who recently splashed out £200,000 on his bar bill at the Playground Club in Liverpool – with £125,000 going on one bottle of champagne. True,

he had the decency to leave an eyewatering tip of almost £20,000 after the celebration, which reportedly followed a big business deal. And all this excess on display at a time of true austerity.

You can almost hear the tumbrils rolling along Threadneedle Street.

No wonder then that the financial market in general – and bankers in particular – are held in such low esteem by the general public, even lower than politicians and journalists, whose own excesses have been hung out in public.

Admittedly these public displays of excess are almost entirely confined to the London bubble. The Northern financial sector – though formidable in size – is not known for wealth-flaunting. That’s left to the footballers.

The culture of “acceptable greed” has never quite made it up here. Extreme wealth exists and there is nothing wrong with that, but being “flash” with it is a City of London thing. Up North we don’t

do that. Yet ethics, people argue, are the first things to go out of the window at times of belt-tightening.

If that is the case, they have got it badly wrong. Ethics had been shown to be good business since the time the cooperative movement was started by a group of greybeards in grimy Rochdale in December 1844. Faced with grinding poverty and driven by the need to provide their community with affordable food, the Rochdale pioneers opened their own shop selling butter, sugar, flour, oatmeal and candles.

Today, the global co-operative movement has a turnover of $1 trillion, employs 100 million people and secures the livelihood of three billion, half the world’s population. And it is not doing too badly in the UK either, eclipsing the national economy with 21 per cent growth between 2008 and 2010. In all, there are 5,450 co-operative businesses in the UK, providing 236,000 jobs and with a turnover of £33.2 billion.

An article in the Harvard Business Review last year gave “shared value” as the big idea for today’s business, defining this as “policies and operating practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates”.

Far and away the largest co-operative in the world is the Co-operative Group, based firmly in Manchester. The Co-operative Group is the UK’s largest mutual business, owned not by private shareholders but by over six million consumers. A leading financial services provider, it operates the Co-operative Bank, Britannia and the Co-operative Insurance.

Among its other businesses are the number one funeral services provider and Britain’s largest farming operation.

Stopping the clock on Commercial viewpoint

First Person Karl Chapman

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he most frequently asked question from potential customers is this: how can you provide access to high-quality legal advice and support at fixed prices when, typically, law firms haven’t (or can’t, or won’t)?

Nearly every lawyer we spoke with said it couldn’t be done. Well, maybe existing law firms can’t do it, but we and others can provide fixed prices.

It isn’t rocket science. All we have done, starting with a blank piece of paper, is to structure our service-delivery model from the customer up, not from the law firm partner down.

We have kept our overheads low. We do not have expensive city centre premises to pay for. We do not have a large head

office or partner model to support. We use effective technology and workflow systems to enable the legal and support systems to work flexibly and efficiently.

What we don’t do is to cut corners in the quality and reliability of the legal services we provide, or in the customer experience we deliver. With access to a high-quality team of lawyers, including some of the UK’s leading QCs, fixed pricing underpins all our offerings.

It is simplicity itself – and ironically it is this simplicity that creates some confusion in the minds of businesses. For too long we have all been used to paying for legal services by the hour. We have grown up with it. We didn’t like it, but there was little alternative.

Well, there is now. The days when we tolerated a lack of transparency in billing are coming to an end. The hourly rate billing model is finished. Put simply, legal bills are coming down without any sacrifice in quality.

Smaller businesses often tell us that they would call a lawyer more frequently (for example to review that property lease, assist with those contract terms,

write new terms and conditions for the website, discuss that employment issue), but they don’t because they are scared of the cost, the ticking clock. So they do it themselves, with inevitable consequences. Our answer is simple: an annual contract starting from £200 per calendar month, payable by monthly direct debit, which provides unlimited access to the legal team.

Too good to be true? Well, businesses can test us at no cost. All businesses can register at www.riverviewlaw.com and receive free access to our legal library which has over 450 letters, policies, procedures, templates and contracts. Businesses can also test the legal team with a complimentary call. We believe that users will be so impressed with our service that Riverview Law will be right at the top of their minds when their business is looking for fixed-price legal support.

But we are not just focused on small businesses. Businesses with up to 1,000 employees can also buy a fixed-price annual contract with a service scope tailored to their sector and their individual requirements.

the times | Tuesday April 3 2012

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Business Insight

‘muppets’ to shared values It is the UK’s fifth-biggest food retailer, the leading convenience store operator and a major pharmacy provider.

The group operates 4,800 retail trading outlets, employs more than 106,000 people and has an annual turnover of more than £13bn. All this is underpinned by an ethical plan which has seen it reduce greenhouse gas emissions by 35 per cent, bring down water consumption by 20 per cent and lend £700m to progress green energy products.

Meanwhile, the Co-operative Bank has been blazing its own trail for the co-operative movement, having been the only British bank to emerge from the 2008 crash unscathed and to actually benefit from it, thanks to the consumer-led ethical policy. (See pages eight and nine.)

Voted “Europe’s most sustainable bank”, the latest available figures show it had £13.7bn in gross sales, an increase of almost 10 per cent, and paid out £104m to members and communities. Come the crash, the Co-op Bank was the only UK bank still in expansion mode, opening new corporate centres, recruiting new people. And at no point did it stop lending or say that’s it.

“We’ve emerged from the financial crisis strongly,” says Keith Alderson, managing director of corporate and business at the Co-op Bank. “I don’t think most other banks can say that. The profession hasn’t done itself any favours over the last few years. Some serious lessons have been learned, but it is going to be quite a while before banks as an industry can rebuild that trust.”

Mr Alderson insists that being part of a co-operative – which answers to members rather than to shareholders – provided the extra discipline to keep the bank from getting caught up in the

The profession hasn’t done itself any favours over the last few years. Serious lessons have been learned The pioneers who founded the co-operative movement in Rochdale in in 1844 crisis. Though the ethical policy played a significant part, he rejects the idea that this is the only factor in the bank’s continuing success story.

“Alongside ethics,” he says, “we still have to demonstrate we have real capability, competitive products, good service, value for money. If one word sums up what we are about, it is that we are a trusted bank. You have to build trust.

That in essence is what we are all about.”

Yet if one thing has held back the cooperative movement from even greater success, it is that there remains the whiff of a socialist experiment about it, some-

legal fees For very large businesses, typically those with in-house legal teams and panel arrangements, we also provide legal advisory outsourcing. This has become known as the “Beyond Panels” model, after one general counsel commented at the end of a meeting: “It’s so obvious I’m surprised no one else has done it, it really challenges my thinking on panels.”

We see current panel arrangements as a natural stepping-stone to legal advisory outsourcing. While it won’t be the right solution for all organisations, legal advisory outsourcing will help shape the way corporations buy, use and measure the effectiveness of legal advice.

This gives general counsels and finance directors what they want – reduced costs, no reduction in quality, one core strategic partner, one invoice, one technology platform, one comprehensive reporting and risk management toolset.

Fixed price budget certainty and quality advice.

Whether it is for small, mid or large businesses, we are confident that we have an attractive model. Why? The phone hasn’t stopped ringing!

Karl Chapman, who holds a law degree from Birmingham University, is the chief executive of Riverview Law, the company that has broken the legal mould by offering businesses highquality legal services at fixed prices. He has a long pedigree in starting, growing and managing innovative and successful companies, including setting-up CRT, a consultancy, recruitment and training business, which with his team he grew to a market cap of over £600m, sales in excess of £400m and with 2,500 employees operating from 200 locations.

After leaving CRT in 1999, he set up AdviserPlus Business Solutions, which itself has enjoyed significant growth and provided the model for Riverview Law.

thing not quite right in capitalist terms – “do-gooders”. In many sceptical minds, it still prompts images of people in Afghan overcoats hugging trees.

To quickly counter that view, all you need to do is look at the John Lewis Group, which heartily embraces the cooperative ethos and enjoys a turnover of £7bn. And if “we are all in it together”, as the Government insists, perhaps the cooperative model offers an answer. Ethics – or responsibility – replacing excess in the financial and business world appear to have a lot going for it, in that it makes good business sense.

Karl Chapman

International Year of Co-operatives With 2012 designated by the United Nations as International Year of the Co-operatives, the movement will be returning to the North of England to celebrate its roots. Co-operatives United, a global expo, is scheduled to be held in Manchester from October 29 to November 2, with the event expected to attract 10,000 international supporters of co-operatives, Fairtrade and ethical business.

Manchester will also act as the main platform for “Co-operatives Fortnight”, now an annual event, which will run during the last week in June and the first week in July. Last year over 290 events took place, reaching four million people.

Tuesday April 3 2012 | the times

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Business Insight

Technical innovation

Wonderland where imagination thrives It was Lewis Carroll’s birthplace and had a hand in the creation of the Large Hadron Collider. Now Daresbury is a hothouse for technology businesses, writes Gavyn Innes

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t is no coincidence that the particle accelerator encased in a thick concrete bunker at Daresbury Science and Innovation Campus in Cheshire is known as ALICE. It is an abbreviation of Accelerators and Lasers in Combined Experiments, but Daresbury was also the birthplace of Alice in Wonderland author Lewis Carroll and is where imagination – fired by entrepreneurial adventure and underscored with scientific rigour – continues to be a watchword.

This is where some of the groundwork for the Large Hadron Collider was carried out, where one of the tenant businesses is developing a diagnostic test which could tackle tuberculosis on a global scale, and where scores of companies are working on products, techniques and innovations which might one day transform aspects of everyday life.

The Daresbury campus, between Liverpool and Manchester, is a hothouse of business innovation. It is a place, say those based there, where science and enterprise meet and it forms a global focal point for the commercialisation of highend technology and research.

On April 1, the campus officially became an enterprise zone, a status which could kick-start a 20-year expansion plan to create a “technology village” housing hundreds of businesses and up to 15,000 people. That Daresbury is at the heart of the Government’s enterprise zone strategy was shown when Prime Minister David Cameron chose to launch the policy initiative there last year.

Having enterprise zone status enables the investment of public money in infrastructure development through tax incremental funding mechanisms and a relaxation of planning laws. Critically, it also means that business rate tax relief can be applied to tenant businesses for up to five years.

The Daresbury vision of a technology village as a global centre for the commercialisation of science is one which has been developed by a public-private partnership comprising the local authority – Halton Borough Council – commercial development partner Langtree Group and a Government agency, the Science and Technology Facilities Council (STFC).

Daresbury is already home to some 800 people, many of them employees at the 100-plus businesses based there, but also numerous scientists from STFC and from collaborating universities such as those at nearby Liverpool, Manchester and Lancaster. Those figures might rise rapidly if the first quarter of this year is anything to go by, with 11 businesses having relocated to the site in the past three months alone.

John Downes, chief executive of Langtree Group, the commercial development partner at Daresbury, says that the enterprise zone will enable a quantum change in the site’s growth prospects.

It allows the joint venture to proactively pursue infrastructure developments which will make the campus a magnet for technology and science-based companies.

Mr Downes also points to the site’s unique “intrinsic” attributes, which make a compelling proposition for businesses.

“Its international connectivity – both in terms of access to airports and to collaboration opportunities – is superb,” he says.

“Its connectivity to the global science, technology and research communities is almost unparalleled. It’s a terrifically exciting time for the campus and partners.”

The success of the site so far, says Professor John Womersley, chief executive of STFC and a member of Daresbury SciTech Enterprise Zone, is in part due to the culture of open innovation fostered there. “Scientists, researchers and entrepreneurs can share ideas and thinking,”

he says, “collaborate on projects and work together on the application of very high-end science to commercial opportunities.”

The statistics support his theory. Half of companies on-site are actively engaged in collaborations with at least one other company on campus, and one business has a total of 12 collaborations. In addition, more than two-thirds of the businesses are engaged with at least one university or with STFC itself.

“Daresbury represents a concentration of the three core ingredients required for true innovation,” Professor Womersley says, “brilliance in science, globally-leading facilities and entrepreneurial can-do.

It is when those three come together that we see the development of products and techniques which have a potentially global impact.

“This mix only works when there is open innovation, with scientists from universities across the country, plus the STFC’s own scientists, working with entrepreneurs and investors to drive the application and commercialisation of new discoveries.”

At a regional level, the site is regarded as a key economic driver and has heavyweight backing from the local enterprise partnerships in Manchester, Liverpool and Cheshire and Warrington, and from the Department of Trade and Industry.

It is also regarded at Government level as making a significant contribution to Great Britain plc’s international competitiveness in science and technology.

Prof John Womersley

Launch of cancer drug firm shows Liverpool’s

By Lucille Richards....................

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he laboratory equipment has been unpacked and tested and the first of what will eventually be a 120-strong team of scientists starts work this week at a new Liverpool-based research and development company devoted to cancer drugs.

The launch of Redx Oncology is a significant milestone in the city’s plans to develop its knowledge-based economy.

The firm is the first spinout from Redx Pharma, an early-stage drug development company already based in Liverpool. The oncology business has been backed with £5.9 million of public money from the Government’s regional growth fund – the only UK biotech to receive public sector support in the last round of funding. Redx has also proved attractive to private investors, brokered by Acceleris, the Manchester-based corporate finance boutique.

Redx believes it has been able to galvanise support through having opened up a potentially vast new intellectual property

space. “Our approach is based on modifying existing drugs to create novel therapies which have their own IP [intellectual property] value,” says Redx Pharma chief executive Dr Neil Murray.

The Redx approach challenges conventional wisdom within big pharma. A “pharmacophore” is the accepted chemical model explaining how known medicines bind to their targets. Traditionally, scientists would try to improve upon existing drugs by making chemical changes in such a way as to leave the essential phamacophore unchanged. Redx challenges the dogma of how to improve upon existing medicines by fundamentally changing the pharmacophore of these drugs – and therefore entering uncharted drug space, leading to a number of potential benefits.

“Working in this way, we have created a substantial library of original compounds,” says Dr Murray. “A significant number of these compounds have passed the proof of concept stage. They promise a variety of patient benefits such as greater efficacy and fewer side-effects, or offer a different means of delivery – a pill, for example, as opposed to an injection.”

The company’s Redox Switch™ platform technology is at the heart of this process. It allows for rapid assessment of new drug candidates, which can go forward to development programmes with lower risk and greater speed through clinical trials.

The compounds which pass proof of concept stage are potentially the product line that will allow Redx to achieve revenues by entering into licensing agreements with mid-sized and large pharmaceutical partners, who undertake further clinical studies on promising new drug compounds.

As Dr Murray puts it: “We’re a discovery engine for big pharma.”

In addition to its cancer portfolio, Redx Pharma has a pipeline of new compounds in several other therapeutic areas. It is progressing programmes in the areas of cardiovascular medicine, influenza and antibiotics. The company expects to do its first commercial deals this year, and Dr Murray says Redx Oncology anticipates achieving the same in the second year of operations.

Redx Oncology starts life with a fiveyear programme based around Redx Pharma’s existing pipeline of research

cancer drugs. These cover a wide variety of cancer types and are designed to deliver a flow of experimental drugs for progression into human clinical trials.

“Liverpool has a highly respected reputation in cancer care,” says Dr Derek Lindsay, managing director of Redx Oncology. “The Liverpool Cancer Research UK Centre, along with the University of Liverpool and the Royal Liverpool Hospital, provide a rich environment for developing new remedies against cancer.

We believe that our new oncology R&D [research and development] centre will provide an important new resource in the challenge of improving the patient experiences and outcomes with this disease.”

The Redx Oncology team will consist of chemists, analytical scientists, biology scientists, administration staff and up to 24 trainees. Many of these new staff are being recruited from outside of the area.

For now, Redx Oncology will operate from laboratories within the University of Liverpool’s Duncan Building, but it is part of a wider vision and will be the anchor tenant of a new Liverpool BioIn-

We’re a discovery engine for big pharma

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Business Insight

Taxing issues

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The Innovations Technology Access Centre at Daresbury “Daresbury represents probably the key element in the wider North West knowledge sector,” says David Parr, chief executive at Halton Borough Council, “a sector which is one of the major focuses for economic development for the region, delivering high-value jobs and growth opportunities. It also makes a significant contribution to the UK’s international competitiveness in science and technology.

“The sheer diversity of businesses at Daresbury is one of its strengths and

unique selling points. We have companies engaged across almost every cluster imaginable, from biomedical to environment and energy, and from advanced engineering to digital and mobile.”

Statistics indicate that the health of those companies is good. Daresbury companies delivered a combined total of £28.3 million in sales in 2011, according to the joint venture partners, and have seen an average sales growth of 37 per cent per year over the past four years. Three-year business survival rates at Daresbury are

about 90 per cent, as against a UK average of about 70 per cent for similar sectors.

“Daresbury’s approach in terms of support to these businesses is a holistic one,” Mr Parr says. “It’s not just about facilities and space; it’s also about supporting them in a range of areas, including access to finance, securing key skills and opportunities to access new markets. We’re confident, also, that we can grow with our tenant businesses so that there’s no requirement for them to relocate as their operations grow.”

in respect of Liverpool’s ambitions in bio sciences and we wish the team at Redx Oncology every success with growing the business and contributing to Liverpool’s reputation as a centre of excellence for cancer research.”

Dr Neil Murray, CEO Redx Pharma; Dr Pete Jackson, chairman Redx Pharma; Dr Derek Lindsay, managing director Redx Oncology; Norman Molyneux, finance director, Redx Pharma

ambitions novation Centre. This will have 70,000 square feet of laboratory space and was granted planning permission in March.

It represents the first phase of a new BioCampus in the city – an ambitious scheme being driven by a partnership between the Royal Liverpool Hospital, the University of Liverpool and the Liverpool School of Tropical Medicine.

The BioCampus will sit alongside the planned new £451m Royal Liverpool Hospital and will bring together the expertise of medics, academics and biotech companies. “The key to successful knowledge economies is being able to connect academic and specialist research assets to emerging technologies that have major market potential,” says Tony Bell, the Royal Liverpool Hospital chief executive, “which is the Silicon Valley model and it’s something the biocampus has been designed to emulate.”

Max Steinberg, chief executive of Liverpool Vision, the city’s economic development company which supported the Redx regional growth fund bid, is likewise optimistic: “The expansion of Redx is a powerful statement of intent

ritics of the UK Government’s growth plans have been quick to point out the decline of the country’s innovation industries. Manufacturing alone has halved as a share of the economy, and job losses in the sector have mirrored that decline. But even the harshest critics will be hard pressed not to commend the benefits of the recent research and development (R&D) tax relief drive.

R&D has been a major Government focus for some time – not surprising when you consider the many experts who, for years, have been saying that the road to recovery lies along the path of innovation. The Chancellor of the Exchequer, George Osborne, made clear in his recent Budget that this focus is unlikely to shift any time soon after he committed to an “above the line” R&D tax credit from April 2013.

While the detailed design of the credit is yet to be published, the announcement is the latest in a long line of changes which have provided the potential to generate a significant cash injection into business. The tax benefit for small and medium enterprises (SMEs) increases again from April this year, allowing companies to save up to an additional 30 per cent of their corporation tax bill for every £1 spent on R&D – a figure which has risen steadily from 21 per cent before April 2011, rising to 26 per cent last year.

Perhaps the most surprising thing about all this is the amount of activity which actually qualifies as R&D. Ian Rowland, head of R&D tax for the North West region at Grant Thornton, thinks UK businesses are still failing to make the most of all the relief available to them – usually because they fail to appreciate how much activity can be classified as R&D. “We are surprised by the lack of awareness and consequential take up of this relief,” said Mr Rowland.

“The critical test for Her Majesty’s Revenue and Customs [HMRC] is the question of whether a company is advancing knowledge in a sector and is engaged in activity which involves genuine technical uncertainty. There is a great deal of scope to claim and it is important to think as widely as possible.

Working to improve margins, cost efficiencies, environmental impact and meeting industry standards can all create R&D opportunities.”

It seems the list of qualifying activity goes on and on.

Far from being limited to product development, it can also encompass developing more efficient processes to drive cost savings, reduce waste or to overcome the technical challenges created by compliance or regulatory issues. Furthermore, R&D does not need to be successful to qualify. If the company is loss-making, it can be surrendered for a cash credit equal to up to 25 per cent of the loss.

“The recent and ongoing changes to the R&D tax relief regime are very good news for UK business and provides tangible incentive to invest in innovation,” Mr Rowland said. “It is very common for claims to result in a cash benefit – we have handled claims which have brought in excess of £50,000 claimed back from HMRC. And claims can easily exceed this – it just depends on the level of spend and development undertaken by the company.”

So far, some 8,000 companies – from SMEs to large corporates – have claimed back in the region of £950 million from HMRC. The vast majority of claimants have been SMEs, but they account for only 25 per cent of the available pot, totalling some £1 billion per annum.

With R&D relief in residence until the end of the current parliament at least, and with developments and improvements to the tax relief expected to continue until the 2013 Budget, many expect the longevity and scope for relief to bring real benefit to businesses which want to innovate – and they are just the kind of businesses we need.

Ian Rowland

Tuesday April 3 2012 | the times

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the times | Tuesday April 3 2012

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Law: Commercial Report

Using fixed fees to break the mould in the legal services market

By Mike Cowley

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s a UK businessman with a track record of starting, growing and managing three highly successful companies, Karl Chapman appears remarkably self-effacing. He claims to have only ever done one thing right – although he admits to having now, with his colleagues, done it three times.

“We simply managed to pick the right market at the right time and put together the right people to exploit it – and I think we’ve now done it again with Riverview Law,” he says. If he is right, Riverview Law is well on the way to seizing a major slice of a financial pie estimated at around £12 billion annually – supplying first-class legal services to companies at a fixed price.

After reading law at Birmingham University, Mr Chapman joined Guinness Mahon Investment Management where he soon showed he was one to watch, being named Money Observer’s top performing UK unit trust fund manager.

His wife was the catalyst for the first company being started from a bedroom at home. The couple were expecting their first child in 1988 and she didn’t want to give up work – so she asked her husband what could be done in terms of working from home.

That led to an interest in the field of telecommuting – and its potential for changing the nature of the way companies did business. So 1989 saw the establishment of the Consultancy, Recruitment and Training Group (CRT), which simply did what it said on the tin – advising companies on how to take advantage of the new technology, then recruiting people to fill the posts and finally training them.

Under Karl Chapman’s direction, CRT went on to grow both organically and by market acquisition to a market capitalisation of over £600 million, with sales in excess of £400m and with 2,500 employees operating from over 200 locations. In 1996, CRT sold 50.1 per cent of its equity for £109m to Knowledge Universe, a private US-based company whose major shareholders were Larry Ellison and Michael Milken.

Mr Chapman and his team then identified another opportunity in a market that was about to open up. Leaving CRT in 1999, they set up AdviserPlus Solutions, a privately owned company which has grown into a leading advisory outsourcing organisation, providing human resources, employment law and health and safety solutions to “thousands” of organisations ranging from FTSE 100 companies to small and medium enterprises.

Now, with Riverview Law, the team has done it again at a time when the legal market has become ripe for change thanks to deregulation and a reduction in demand as customers seek better value when faced with high legal fees. Ironically, it was clients at AdviserPlus who urged Mr Chapman and his team to enter the legal market with a similar model.

Riverview Law is now firmly focused on ensuring that businesses of all sizes have access to cost-effective, fixed-fee legal advice. It has built its model from the

Beth Brierley

Edward Jones

Julie Foster

Leanne Kirtlan

A member of the Riverview solicitors team. She is particularly experienced in employment law, advising on the full range of matters, including unfair dismissal and discrimination claims.

While training to become a solicitor, her outstanding promise was recognised with the award of the Baroness Cohen of Pimlico Scholarship at BPP Law School, Manchester.

A member of the Riverview solicitors team.

He has experience in business law and landlord and tenant law and now specialises in employment law.

After graduating in Law with Government from the University of Ulster, he completed his legal practice course at Chester College of Law and qualified as a solicitor in 2009.

One of Riverview’s team of qualified legal assistants, providing vital support to Riverview’s solicitors across a range of areas.

She has considerable experience in support roles within the legal profession and is noted in testimonials for her first-class communication and written skills, excellent organisational abilities and exceptional attention to detail.

One of Riverview Law’s dedicated team of member support advisers.

Noted for her outgoing personality, positive attitude and excellent communication skills, she has previous experience of customer-facing roles with a leading travel provider and with one of the UK’s largest retail organisations.

Richard Lissack QC

Simon O’Toole

Nawazish Choudhury

Head of the Business and International teams at Riverview Law. He is universally lauded by clients and peers for the outstanding quality of his work as a barrister. He provides top-level advice in commercial law, regulatory issues and public law across a range of areas, both nationally and internationally.

His practice is mainly high-profile complex litigation, with a strong corporate slant. He has appeared in many landmark cases over the last two decades.

Over 25 years’ experience at the Bar and is an expert in complex property-related litigation, professional negligence, partnership disputes, general contractual disputes and public law.

He accepts instructions from both domestic and international clients, ranging from individuals to insurance companies and large multinational corporations. He is regularly instructed directly by American attorneys in UK jurisdictional disputes, and has also appeared before the Court of Appeal in Gibraltar.

Specialises in consumer credit law, contractual disputes, property disputes and personal injury cases.

He is also experienced in licensing work and large group litigation, specifically with regard to disclosure issues.

A graduate of the School of Oriental and African Studies and the University of London, he was called to the Bar in 2003 and completed pupillage in 2007-08. He regularly appears in the County Courts and the High Court and is a member of the South Eastern Circuit, the Administrative Law Bar Association and the Personal Injury Bar Association.

customer up, not from the law firm partner down, and seeks to change the way organisations buy and use legal services.

Fixed prices of £2,400 annually are offered to companies with up to five employees, £3,960 for companies with between six and 24 staff and £5,988 for firms with 25–50 employees. The annual fees cover all legal advice and work up to the point of litigation proceedings being issued, at which stage a fixed-price assessment will be made. Large organisations can outsource their in-house legal function to Riverview Law, also at a fixed price, and reduce the duplication and cost associated with the current in-house / panel arrangements.

But how does Riverview manage to offer such low-cost packages? “We don’t cost it out like a law firm – how many people, how many hours do we have to bill to cover costs and generate a profit,” says Mr Chapman. “So we can remove the ticking clock and focus on solving the customers problem rather than hourly billing, we focus on winning and renewing annual contracts.

“We have access to a great legal team underpinned by one end-to-end technology platform. This allows us to amortise the quality of our team across a much wider client base and it gives us visibility

of earnings which means we can invest heavily in improving our services.”

Is there not a danger of losing the personal touch, the lawyer-client special relationship? “No, it is very straightforward,” Mr Chapman says. “Imagine you have bought our service. The first thing is you get a phonecall from a lawyer who becomes your prime point of contact – he or she is your lawyer.

“Their job is to make sure they support you in their area of expertise and that they draw on other team members, seamlessly, when you require other specialist advice. And you’ll get a level of service second to none, as nothing falls between the cracks. It’s a very proactive service – not relying on you calling us, but us calling you to manage that issue effectively. Our business model is predicated on renewal rates and businesses only renew if they get a great service at a great price.”

Once again, timing has proved key for the success of the latest venture. According to a recent RBS report, as many as 3,000 UK lawyers could lose their jobs this year as top law firms struggle with weak demand and overcapacity. Other sources suggest that there are 5,000 too many lawyers as companies prove increasingly averse to paying traditionally

high legal fees as austerity bites. Whatever the accurate figure, it has proved a rich recruiting ground for Riverview.

Some of the biggest names in the business have not only welcomed the arrival of the new model, but joined it. The result is that Riverview now has, arguably, the foremost legal team in the country, headed by 14 Queen’s Counsels.

Leading the business and international teams at Riverview is Richard Lissak QC, who provides top-level advice in commercial law, regulatory issues and public law across a range of areas, both nationally and internationally. He has appeared in many landmark cases over the last two decades, including Robert Maxwell and pensions, the Buncefield refinery incident, and the inquiries into Harold Shipman and the Hatfield rail crash.

The directories have variously described Mr Lissak as “QC of choice in any big case”, “a truly exceptional talent”, “a standout silk” and “in a league of his own”.

“Once again, building Riverview hasn’t been rocket science,” says Karl Chapman.

“This time being in the right place at the right time has given us not only a serious business but also the remarkable legal and customer service people needed to make it work.”

Businesses only renew if they get a great service at a great price

Tuesday April 3 2012 | the times

8

Business Insight

Cover story: Co-op

The banker who is in danger of giving bankers a good name Keith Alderson, managing director of corporate and business banking for the Co-operative Bank, is as hard-headed as they come.

But he still embodies the sector’s oldfashioned values of reliability, trust and personal service, says Mike Cowley

A

t a time when banker-bashing appears to have been elevated to a national sport, Keith Alderson is in danger of giving the now-maligned profession a good name. Here is a banker who still very much embodies all the old-fashioned values – reliability, trust and personal service – and it isn’t just a case of paying lip service.

To a casual observer, Mr Alderson may appear to be something of a throwback to when bankers were looked on as up-

Keith Alderson

standing members of the community, there to help rather than attempting to sell you something you are not sure you wanted. And to some extent this is true.

Yet although he may be considered one of the good guys in the light of what has happened of late, he is still a hard-headed banker with a focus on serving his customers and ensuring his bank delivers in financial terms.

As managing director of corporate and business banking for the Co-operative Bank, Keith Alderson – along with his team – has deliberately opted to remain very much old-school in his approach to customer service. And he is proud of it.

But do not take this stance as being merely altruistic, as in business terms it has paid serious dividends – a word the Co-op made very much its own ever since it introduced “divi” stamps for members.

While unscrupulous financiers were openly arguing that greed was good, and with toxic culture appearing to have become a norm in the banking world, the Co-operative Bank steadfastly took the opposite view.

Rather than entering the general credit free for all, they followed the strict principles which have seen them turn away £1 billion in business because the would-be customers did not share their ethical standards. Keith Alderson sums it up succinctly, by saying that they declined the ongoing opportunity to “fill their boots” during the period in the run-up to the credit crunch and opted instead “to stick to their knitting”.

The end result was that the Co-operative Bank’s corporate and business banking emerged in good shape from the 2008 crash and the subsequent down-

turn, and continued to expand its support for business customers, having boosted lending by more than 40 per cent since 2007.

As the furore that followed the crash forced some big name banks on to the back foot, the Co-operative found itself standing on the sidelines, able to carry on with its day-to-day business almost unnoticed as it seized the meltdown in confidence to become an increasingly serious player.

The Co-operative Bank has now edged up to around seventh place in the UK corporate banking league, but in certain sectors it is much higher. It succeeded in doing this in part thanks to being seen as a safe haven following the crash, and in part by bucking the trend and opening an additional 12 corporate banking centres – taking its total to 22 – during the time when most of its rivals were battening down hatches.

The last annual results – from March 2012 – show that the banking group had assets of £48.3bn and corporate loans of £8.7bn. And with the bank being the preferred bidder for part of the Lloyds business, it could become a major name on the high street as well, with almost 1,000 branches. Not bad when you consider that only three years ago the Co-op Bank had just 90 branches.

All this has been achieved in a sustainable way, as the bank remains customer self-funded. In general terms, they need to have a pound to lend one, building up the deposit side proportionately to the lending.

It is testimony to their responsible banking ethos and capabilities that they are the market leader in the local authority banking sector – with local authorities compelled to tick all the boxes from value for money to service before they get into bed with a bank. Banking for over onethird of all authorities in England and Wales, the Co-operative historically won council business where Labour was in control. Today they deliver for every hue.

Having grown their share of the small and medium enterprises market significantly in the last four years, they anticipate doing the same again in the next four years. Yet it is the Co-operative Group’s ethical stance – which makes it reject customers – that tends to make the news more than those they accept.

Every prospective customer needs to pass an ethical scan, which is as rigorous as it sounds. Companies that have found their way barred to banking with the Co-operative of late have included those manufacturing chemicals that nature has difficulty breaking down, and those connected to animal testing with regard to cosmetics and toiletries.

Yet for all the £1bn in business the bank is reported to have walked away from since the ethical policy was launched in 1992, this has been more than compensated for by a near-sixteenfold increase in corporate lending balances over the same period.

It is the ethical stance which has, in part, influenced the bank to commit to investing £1bn in renewable energy projects by 2013. Keith Alderson, however, insists that the move – like the rest of their initiatives – is still based on sound business practice rather than any attempt to be seen as a do-gooder.

After all, the Co-operative Group are owners and operators of their own wind farms, which help supply energy to their retail store outlets. So renewable energy as defined by the bank for investment purposes mainly involves small to medium-sized community onshore wind farms.

The bank gets involved in renewable schemes with proven technology. Having already invested half of the £1bn pot, it remains happy to invest the remainder in an area where the risks and potential outcomes are understood. The bank’s formal assessment is that this sector has a future stretching out for many years.

Keith Alderson goes to great pains to point out that responsible – he prefers to use this word rather than ethical – banking in terms of the Co-operative does not indicate that his team is not grounded commercially. Like any other bank, they spend their time assessing risk and checking whether companies can repay their loans. Good old-fashioned banking, then.

Not surprising, though, from a team headed by a self-confessed old-fashioned banker who came up through the ranks the hard way. It was at 10am on Tuesday, August 8, 1978 when Keith Alderson turned up at the NatWest branch on Runcorn High Street, complete with curly perm and purple suit – “acceptable in those days” – to embark on his banking career.

Starting out on the lowest rung on the ladder – the office junior – he found himself assigned to hand-printing chequebooks for customers, as was customary at the end of the 1970s. From there, he began a steady move up the ranks – teller, standing order clerk, then assistant manager at Prescot – taking his early banking exams as he learned the nuances of his profession.

In 1985, Keith Alderson’s talents had been sufficiently recognised that he was moved to corporate banking, where he further honed his skills as assistant to a well-versed area director – and ended up with Pilkingtons as one of his clients.

The Co-operative Group’s new head office

We don’t have to deliver short-term gains for shareholders, we held fast to growing the business on a sustainable basis

the times | Tuesday April 3 2012 the times | Tuesday September 27 2011

9 9

Business Insight Business Insight james glossop for the times

nity that excites me, to see how far we’ve come, and to see how far we can go over the next ten years.

So, is he worried that global economic slowdown might blow those plans off course? “Every company has to be sensitive to the economic environment around it and be sure it is on top of any potential implications. Having said that, I would step back and look at our experience as we went through 2008 and 2009, where there was a significant drop-off in activity impacting on markets. We were very clear in terms of the action we took: we reset the base, looked forward.

“Lots of opportunities come out of these difficult times but it doesn’t take away from the medium- to long-term fundamentals across our markets. Mining, oil and gas resources are finite and there is a growing demand for them. That combination is going to drive further investment.

He believes in taking a positive view: you can’t ignore the short-term environment, but you can look at it in the context of a few years ago and the broader opportunities in the longer term, he says.

L

ooking forward, Cochrane stresses, also means investing in talent, and he is almost evangelical about encouraging individual potential.

“It’s our people at whatever level they contribute who make the difference, who enable us to deliver,” he says. “Look at our growth in the past couple of years, both in achieving that and moving ahead needs capability in our people. when lending money – the cusRegional credit was the next stop, as a sanction- awful lot of business sloshing around,” Keith Alder- rigorous standards “We areworthy investing significant sums in credit to receive credit. ing manager, where he learned how to assess lend- son. “Instead, we stuck to our knitting. Fundamen- tomer has to be this, have just off ofa taksenior “Whilst we are and inevitably in thekicked business ing proposals from that side of the fence before tally, we retained our more cautious risk appetite as management If we Alderson training says, “weprogramme. try to do that moving back into the front line with an insight into a bank. Back in 2006–07, we could see deals were ing risks, Keith don’t have the people we itwill be held we don’t always get right.” how he could best help his customers to grow their becoming more and more aggressive, more highly sensibly – although continued So what back. is theWhile futureinvestment economic and outlook for businesses. Moving up to be a senior corporate re- leveraged, the covenants attached to these loans focus are very much the forefront the UK from the perspective of theatCo-operative lationship manager in his native Liverpool, in 1999, were becoming more and more relaxed. of my leadership no priorities, doubt at allinitmy remains a diffi-role “You could see some of these deals were not Bank? “There’s at the age of 39, he became one of the youngest as environment,” CEO it is alsoKeith vital Alderson to make sure says. we corporate directors for NatWest in the North West. capable of withstanding much of a downturn. So cult economic are building up the next of generation is that a large number business- of This saw a number of corporate banking centres we stuck to our policy of being a responsible cau- “Our experience a lot of what they can to weather the tious lender. We had a view on what was right for es have donemanagers. reporting directly to him. to out building a sustainable a lotis ofback money there and lots of Following the hostile takeover of NatWest by us – we are not obsessed in driving up the profit, storm. There’s “It long-term If we only wanted sitting onbusiness. a lot of cash as well.

RBS in 2000, he was appointed by RBS to merge we don’t have to deliver short-term gains for share- businesses are success for a year or two,need we wouldn’t “It’s a confidence issue.

Businesses to have be the two corporate banking businesses across parts holders, we held fast to growing the business on a doing a lotinofanthings we areworld. very focused invest, uncertain And of the North West – a far from easy task when the sustainable basis and to taking a longer-term view. confidence to now.” data we are seeing over the last couple teams had been strong competitors against each The profession hasn’t done itself any favours over some of the on Despite thatto see unrelenting focus, just starting small signs that other in the marketplace. The key objective at the the last few years. Some serious lessons have been of weeks, we are Cochrane agrees, having a good life baltime was to prevent customers jumping ship. Even learned but it is going to be quite a while before things are improving.” is crucial. “When working And has ance the Co-operative Bank I’m which cham-I’m though some from NatWest felt let down and other banks as an industry can rebuild that trust.” passionate the business, do the thrive gotabout the balance right Ion Keith Alderson insists that being part of a co- pions responsibility banks were circling – writing letters saying “Is your I’m quite driven.

I have a of it; bonuses?

“We haveHowever, a policy where relationship manager more worried about his job operative – where he answers to members rather thorny issueon relatively family, andinatline weekends it’s such a great business that when the op- successalmost a than new set of challenges.

Keithdiscipline Cochrane believes executives receive baseyoung salaries broadly with shareholders – provided the extra than you?”

– the exercise was completed tend focus although portunity arose to become chief executive, “It’s back to that passion about doing investing in talent that Ifor the median the to role theyon do,the andkids have—the opto keep the bank from getting caughtinup in the crifully. wifebonuses would say not always exclusively! well, you Alderson just don’t turn down that things better, openingthe ourethical mindspolicy — and will help Weir Group portunity tomy earn which are very firmly sis. Though played a significant Keith successfully randown. the combined “I try hard to have differentand sense “Therewith is a great team senior man-share ourfororganisation’s mind.the Weidea operate in is the to build sustainable, assessed against performance, bothafinancial part, he rejects that this only afactor business over 50 perofcent market of(such perspective.

When you have senior agers and Then talented people across huge markets as acontinuing player we’re rela-story. long-term business non-financial as customer advocacy anda colin thebut bank’s success three years. the potential move tothe the Co-opmanagement role it can easily take over, organisation, so“Ithe to business do tively erative loomed. gotopportunities attracted to this be- small.“If we just went out and said we were an ethical league satisfaction).” the ability step back and have a dose something quitethat special here are where very I could “Through planning At social so events, whento Keith Alderson is asked bank,strategic we wouldn’t last verywe’ve long. We have had to cause I thought here was a bank of for reality, like the taking your daughter to exciting.

That’s what me:“with I want identified opportunities broaden our a living, word “banker” inwe tohave real capability, competitive what he does make a difference,” hegets recalls, thetoadded at- demonstrate a sports on a Saturday, is good for realise potential ofofficed this business.

The region. market and product andvalue our for money. evitably raises a few class eyebrows.

Yet, if questioned products, goodportfolio, service, and tractionthe of being head in my home group has acome a long way in the pastovergeographic footprint, he tells them it’s the Co-operative, the “If one wordpartly sums upthrough what we are about, it is further and everyone.”

“I had programme of interviews two Perhaps discovery decade now on the next organic growth anda partly ac-have to build trust. response is: “Oh, you’rethe onemost of thesurprising good guys…”. that we are trustedthrough bank. You months— and thewe’re morefocusing I went through the process, about Cochrane is despite his business stage and Ibeing passionate about whatitiswasquisition.

It’s that real sense of opportuin essence is what we are all about.” the more warmed to it and thought a re- That DNA, he’s not all about the numbers.

This message has obviously been getting over ally good organisation. At grassroots level, it didn’t Ultimately, of course, he wants them to feel an awful lot different, but organisationally they as the Co-operative has witnessed a steady stream add up, and then to multiply. Yet there is were two completely different cultures. This was a of corporate customers knocking on their door. At a strong sense he is aware of his responmanufacture pumping equipment for theit Clyde North America’s growing organisation demand for “fracking” equip-the same time, theofbank re-emphasised why is much more values-based and much sibility as part of something bigger, and shipyards. ment used inonextracting oil andThis gas bank from shale is key consistently top in the customer care league by more focused the customer. had very wants to6, play hisinpart.

Cochrane, it seems, Today,toWeir employs around 13,000 people in to Weir upbeat profit predictions announced offerGroup its long standing clients a little much the Group’s customer at heart and plans to go places. continuing Born February 1960 Childwall. is an architect. more than 70 countries, working in the minerals, oil during the summer.

Even in 2003, you could see this bank had a strong extra TLC.

Educated“With at Penketh School, Weir,High it’s that rich Warheritage, the and and power industries.

Rapid That’s growthacontinues This half-term report detailed income up 33 per cent “Doand yougas, know trust the people? proposition.” rington – four A Levels (maths, tremendous track record:chemistry, I want to build be been driven expanding intosays. “We emerging markets to £1.03 billion, orders soaring 43 per cent to £1.2 massivetofactor with us,” by Keith Alderson Yet some outsiders viewed bythe Co-operative biologyupon and general that,” hestudies). says. “This is, quite rightly, andthat. providing services globally. billion boosted by 23 per cent We regularly back customers who Bank at and thatpre-tax time profits as being old-fashioned, as itto major on

Married to Carolyn 20 years they to do my a very proud for business, so I– want Innovation driven by customer demands is central £178 million. was not doing the sexy bits. This turned out to be have been with us for years based on our knowlmet when shebit was training officer for small toa help move it forward, help the company’s success, and earlier this year it At the position, time Keithas Cochrane “The were edge of to working with them.” a smart some ofcommented the deals that – withit two children, Elizabeth 17 don’t sustain for the next 100 years. You announced the investment of £2 million in a dedicatedNatWest groupto will continue to invest to grow of Businesses who bank with the Co-operative also starting happen in the market were ahead subsequentdo 14. that by standing still. research The Weir Advanced Research our endto markets andAs wethe now expect profits for to know that all thefacility. decisions are still taken round a Centreand Tom ly proved be toxic. credit boom began “It requires initiative and abilityin to seek will beof a central of Strathclyde thehold full year somewhat ahead of ourinto oth- table with a small number peopleplank involved who take and to be instil a gambling streak

Hobbies – trout fishing, cycling, walking out opportunities and take advantage of University’s recently established previous expectations.” customer relationship erwise orthodox bankers, the Co-operative stuck to are able to factor-in the Lake District, horse racing. those opportunities — that is the broader Technology Innovation Centre in – the track record – something that and has sometimes its Founded guns. in 1871 in

Working day – at his desk at 7am, goes message that sits comfortably with what Cochrane said the partnerGlasgow as regarded G & J Weir, as theprudent, cautious and been lost in the bankingGlasgow. world. Not that prospec“We were home around 6:30pm. the underlying themes are for our busiship wouldshould “continue to the bring company responsible clients think probably a was bit boring because we didn’t fill our tive corporate or business ness today, and it’s driving our teams breakthrough for the invention and done because there was an Co-operative is a pushover.

The bankdevelopments still applies to our boots as we could have

Innovation driven by customer demands

Keith Alderson

PROFESSIONAL BRIEF

Challenge Your travel of turning big begins and ideas into ends where reality you liveis key

F

S

or many years, Scotland’s life science sector has been heralded ize does matter when it comesas one to of the nation’s rising stars. business air travel, accordWe a tremendous opporinghave to Craig Richmond, chief tunity to leverage ourof resources including executive Peel Airports, the NHS, our our excepwhouniversities is based at and Liverpool John tional heritage for medical Lennon Airport.innovation, talent infrastructure encourage and “Theand primary benefit istothat your travel attract big business.

So you whylive,” does Mr is it that begins and ends where many of oursays. young science companies Richmond “It’slife always better to fly are to getyou off get theoff ground? fromstruggling home. When an interThe challenge of turning ideas into continental flight reality and companies of scale seems and youstill think: to elude all, but a few, and is an ‘Wow, I’missue onlythat 10 needs to be urgently addressed. or 15 minutes from The life science industry is truly global home. and Scotland, as others, has identified it “Business travel asaasmall key sector is part ofto drive future wealth our business, but it and prosperity. is growing.

It’s very But aspiration isn’t important to have enough good air and linkswe and need to act now we’re trying very to fully the Craig Richmond, hard toexploit establish CEO, Peel Airports opportunity new businessbefore we get partners. left behind. travel Lackany of funding Air travel has not been made easier in Neil McInnes looksso weistry a vociferous the past few years, to make it as to pooling resources lament by those quick as possible. in the sector.

“We’ve put a lot of time, money and efScotland has a vibrant business fort at Liverpool into making ourangel security community andasthe Scottish You Investment process as good anybody’s. can be Bank’s and Venture Funds parked Co-investment and through security in 15 minplay important role. However, there utes. an Not many airports can say that.” is aThe growing of Canadian forebodingAir that this formersense Royal Force money could redirected renewables. pilot plans to be open up directattransatlantic Coupled our lack of a strong active routes to with Liverpool’s business community Venture community, specialisusing theCapital Stateside links of Peel’s parent ing in life sciences in Scotland, growth to is company, Vancouver Airport Services, inevitably slow. promote new routes.

That said,tolife science is major fundamenIt is keen re-establish internatally long term, high-risk business.

It tionala links following the loss of KLM’s is expensive, for instance, toBut takeeasyJet drugs links to its Amsterdam hub. through clinical trials into the market still operates flights to and Schiphol from with no guarantee a return.

But if ScotLiverpool and thereofare other airlines land is serious aboutthe its gap life left science sector, interested in filling

by KLM. we needistointerest find ways get businesses “There fromtoother carriers toto aother pointhubs where venture capital is inside Europe,” Mr money Richmond forthcoming. says, “so it would be great to get that While Scotland’s life science sector back.” remains made up of many diverse small The success of John Lennon Airport companies, there may also becity. an argumirrors the resurgence of the It has ment for consolidation. seen passenger numbers Pooling rise fromresources 500,000 and collaboration criticaltoday mass a year 20 years agoto tocreate five million with indigenous or part– “Another amazing growth companies story,” as Mr nering withputs organisations overseas is one Richmond it. route and may well prevent some compaIn tough financial times, big business nies in these particularly hard oftenfrom looksfailure to Westminster for help and times.

Getting investor ready sees is another stimulus.

But the air industry a Govprerequisite, especially major ernment which is doingwith exactly theforeign oppoorganisations on. rise – double site. The 8 perlooking cent Budget has an exceptional pool ofair theScotland rate of inflation – in the punitive talent andduty ideas.

But in today’s passenger means that sinceglobal it was first competitive notrisen enough introduced ineconomy 2005 thethat levyishas by without theper right incentives and the businearly 360 cent. ness to supportsays them.

“Itinfrastructure needs to be scrapped,” Craig Neil McInnes, Head of Technology, Richmond.

“It’s money out of the industry Grant Thornton that’s not being Scotland reinvested in it. In the Netherlands, they introduced it – but when they saw passenger numbers falling, in association with they quickly took it out. But this Government just refuses to listen.”

Tuesday April 3 2012 | the times

10

Business Insight

Charge Ahead North

North East charged up to One in three of the UK’s conventional cars are produced in the North East.

Now the transition to low carbon vehicles has begun

N

orth East England and low carbon vehicles (LCVs) have become synonymous in recent years, with more than £200 million having been invested in developing the region’s world-leading expertise since 2006.

The recent announcement that Nissan, in partnership with Gateshead College, is to develop a Zero Emission Centre of Excellence reinforces the North East’s burgeoning reputation in this field, not only in the UK but on an international stage.

With one in three of the UK’s conventional cars currently being produced in the North East, a number of manufacturers, organisations and stakeholders have now started to lead the transition to LCVs – a challenge that has already seen the region recognised as the UK’s first designated Low Carbon Economic Area.

Dr Colin Herron, managing director of Zero Carbon Futures, the organisation set up to oversee the growth of the LCV industry in North East England, outlines why it is so important for the region to be at the forefront of this pioneering sector. “There is a clear need for society to reduce carbon emissions,” he says, “and the car and home are key in terms of how the public can play an active role in this.

“Electric vehicles are not only vital for the environment, they’re cheap to run as they don’t require road tax or servicing and fuel costs are 75 per cent less than diesel. These factors are all contributing to predictions that tens of thousands of new LCVs will be on the roads in the next few years.”

Colin Herron, managing director, Zero Carbon Futures

Dr Herron says that this shift towards LCVs creates a clear opportunity for the North East to maximise the assets it already boasts – an automotive sector and a well-established supply chain worth £1 billion that is set to increase over the coming years in line with the demand for LCVs. “As home to Nissan’s Sunderland plant, Sevcon, Smith Electric Vehicles and AVID Electric Vehicles,” he says, “it is no wonder that the North East was recently named as the place in which people are most likely to consider owning an electric vehicle.”

The region’s firm commitment to the introduction and adoption of electric vehicles (EVs) is already manifesting itself in a number of ways. The North East now has a comprehensive package in place that comprises manufacturing and battery development, the UK’s most integrated EV charging point infrastructure, research and development and training facilities, and a leading supply chain. With a history of innovation and engineering, it is these LCV assets that underpin the North East’s current position as a major force in the low carbon industrial economy.

Only last month, news that a memorandum of understanding had been

signed between Nissan and Gateshead College – to develop the Zero Emission Centre of Excellence (ZECE) in the North East – helped to cement this commitment. The new centre will act as a business incubator for the EV industry, creating jobs in the region and developing knowledge, skills and technology.

Research and development will initially focus on the charging infrastructure and battery second life.

The ZECE will also act as a home for the manufacturing of Nissan’s cuttingedge quick charger technology, which allows CHAdeMO-compliant EVs to charge to 80 per cent in just 30 minutes. This follows an agreement with charging station manufacturer DBT to set up a new production facility at the centre. The facility will produce up to 1,000 units a year in a bid to establish a network of quick-charge stations across Europe, with thousands of units in place by the end of 2015.

Furthermore, the EV spotlight will be focused on North East England from 2013 when the Nissan Leaf goes into production, after the Sunderland plant secured investment to become one of only three sites worldwide to manufacture this revolutionary vehicle.

The manufacturer is building an onsite battery plant to support the next generation of EVs: the £200m European electric car battery mother plant is currently being developed in Sunderland and will have a production capacity of 60,000 lithium-ion batteries a year when completed.

Part of the national Plugged-In Places programme, which provides funding to install EV charging points throughout North East England, Charge Your Car has so far been responsible for the installation of 400 EV charging points, giving the region the most advanced EV charging network in the UK. “The Charge Your Car project is already making great progress,” says project manager Josey Wardle, “ensuring the region is fully ‘joined up’, so that EV drivers are never far away from a charging point. It is also contributing to developments in the EV industry on a national level, through a number of research projects that will help us to understand EV use and charging behaviour, bringing about improvements that will ultimately instil confidence in EV use that will in turn increase the number of vehicles on the road over the coming years.”

The North East has positioned itself to be a genuine international leader in the LCV economy

the times | Tuesday April 3 2012

11

Business Insight

lead the way with LCVs Charging ahead as most connected EV-ready region

T

he North East is leading the way in electric vehicle (EV) charging, with 400 charging points currently in place at key locations – making the region the most connected and EV-ready area in the UK. Since 2010, when the North East was chosen as one of the first three areas to put in place an EV infrastructure, Charge Your Car – the region’s Plugged-In Places scheme – has made significant progress towards its bid to install 1,000 charging points. By April 2013, the network is intended to stretch from Berwick in Northumberland to Yarm and Guisborough in the Tees Valley.

The network comprises standard, quick and domestic charging points which have been put in place as a result of the Charge Your Car’s efforts in promoting the benefits of the scheme to partners, businesses and members of the public throughout the region.

The programme is funded by the Office for Low Emission Vehicles, One North East and regional partners, and subsidies are available Josey Wardle of Charge Your Car with transport minister Norman Baker towards the installation of standard and domestic a visit to the region earlier this year, “but they As well as boasting the most advanced netcharging posts to encourage take-up ahead of will only be a truly viable option if drivers are work overall, the North East also has the most the expected surge in EV sales over the coming able to easily recharge. connected network of quick-charging stations, years.

“The Charge Your Car project is a trailblazwith eight now in place. Quick chargers are “The primary aim of the project is to encouring initiative that is delivering the infrastrucvital to ensure that EV drivers can make longer age EV uptake,” says Josey Wardle, project manture needed, and I congratulate them on their journeys, as they charge a vehicle in under 30 ager for Charge Your Car. “This market is still in work.” minutes. The points are located at key strategic its infancy and it is believed that it is only when Grants are available for any organisation in locations on major spine roads throughout the drivers see charging points in public places that North East England wishing to have a standard region, and another four chargers are due to be EV ownership will become attractive. Per head charging point installed on their premises. For installed in the coming months. of population, the region has far more EVs than “These cutting-edge vehicles have the poten- further information on the funding, visit any other part of the UK and we believe that this www.leadthecharge.org.uk or call the Charge corresponds with the fact that we also have more tial to revolutionise motoring in this country,” Your Car team on 0191-490 2474. said transport minister Norman Baker during charging points than any other region.”

There is so much going on in the North East in the LCV sector that it can be challenging to keep up with developments. However, people should not be fooled into thinking it is happening in a piecemeal or slapdash way. The region has identified the opportunity that the sector represents and has developed a co-ordinated approach to realising that potential.

“All of the exciting developments that are coming to fruition now are the result of a huge amount of planning and partnership work that goes back several years,” says Dr Herron. “We believe that the North East has prepared and positioned itself to be a genuine international leader in the LCV economy. We are building relevant knowledge and skills within the workforce, the charging infrastructure is maturing nicely and we will soon be manufacturing the Nissan Leaf here. These are very exciting times for the region, in a sustainable and growing industry sector.”

Find out more about what’s happening in North East England at www.zerocarbonfutures.co.uk

Driving infrastructure for electric vehicles

A

mong the many partners of Charge Your Car is an organisation which has been embracing the electric vehicle (EV) revolution for a number of years.

Metrocentre in Gateshead – owned and managed by Capital Shopping Centres – installed its first two EV charging points over three years ago. Europe’s largest shopping and leisure centre immediately saw the benefits of being ready for EVs, providing its customers with a much-needed recharge while they shopped.

Metrocentre has since installed an additional three charging points as part of the Charge Your Car programme, including the UK’s first public quick charger when it was installed in January 2011. The 50kW stations can recharge cars such as the Nissan Leaf and Mitsubishi i-MiEV to up to 80 per cent of their capacity in 20 to 30 minutes, compared to eight hours for a full charge using a 3kW charge point or four hours using a 7kW charge point.

The advanced charging points will be a major weapon for combating “range anxiety” in drivers using EVs, and by locating them in strategic locations it is hoped they will provide reassurance for drivers that journeys beyond a full battery charge are possible in and around the North East. There are now eight quick chargers installed at key spots throughout the region.

“We want all our visitors to have the best possible customer experience when they visit the Metrocentre and strive to offer the best facilities of any shopping centre,” said Steve Beverley, sustainable travel manager at the Metrocentre. “Part of our mission is to make the Metrocentre greener and cleaner and this initiative fits perfectly with that.”

The organisation has also been involved in the region’s trial Switch EV project, which is placing 44 electric vehicles with businesses and individuals to research EV driver experience.

Quick charger at Metrocentre (l-r Colin Herron, MD, Zero Carbon Futures; John Lowes, Charge Your Car project; Steve Beverley, Metrocentre sustainable travel manager)

Tuesday April 3 2012 | the times

12

Business Insight

Personal finance

North West a wealth hub again

By Gavyn Innes

F

or periods during the 19th century, the wealth of Liverpool exceeded that of London itself, with 40 per cent of the world’s trade passing through the city’s bustling docks.

Clusters of concomitant professional expertise in insurance, banking and wealth management developed and thrived on the banks of the River Mersey.

It should therefore come as no surprise – although it invariably does – that Liverpool’s wealth management sector is the largest in the UK outside London, significantly greater than those in cities such as Manchester and Edinburgh.

Liverpool’s status was confirmed by nationwide research undertaken in 2010 for the ComPeer report produced by representative body Professional Liverpool. The report focused on assets managed, portfolios held and revenue generated amongst private banks, private client investment managers, full service stockbrokers and execution-only stockbrokers.

The North West was identified as the strongest region outside of London, with Liverpool highlighted as the specific driving force behind this success. The city has a cluster of boutique businesses and is well represented by the large banks and corporate institutions which have acquired many of the independent firms in the last decade. In total, the North West had almost £25 billion of assets under management in 2010, across more than 145,000 portfolios, and its wealth managers generated almost £250 million.

Cheviot Asset Management, which has its headquarters in London’s Covent Garden, is the latest asset management company to spot the potential of the Liverpool

marketplace and to choose the city for its first office outside the capital. Cheviot opened an office in the heart of Liverpool’s commercial district just under a year ago and already has close to £150m of funds under management.

Simon Walker, senior partner at Cheviot, says Liverpool’s historic strength in the sector was a key factor in the company choosing the city for its first foray outside London. “Liverpool has a critical mass of expertise and quality in terms of the professionals operating here,” he says, “which cannot be matched anywhere except London. The collective strength and offer of the many competing asset management businesses in the city means Liverpool is a magnet for professional intermediaries and private clients, significantly outpunching cities such as Manchester and Leeds.”

Cheviot operates within an independent partnership structure, providing investment management advice to high net worth private clients, charities and trusts.

It now manages and advises on over £3.9bn of client assets and is targeting clients with at least £250,000 in investable assets.

“We are in Liverpool in part because we identified a gap in the market,” says Cheviot chief executive Michael Kerr-Dineen, “combining a contemporary and modern approach to investment management with a very traditional approach to our relationships with clients, all of it underpinned by genuinely independent advice.

“Confidence in large banks and financial institutions has naturally been shaken by events of the past few years. Unfortunately, the banks have generally responded to this by paying less rather than more attention to the individual needs of clients.

Our independent partnership structure

means we offer an alternative to the growing corporatisation of the sector, which is now dominated by businesses such as Deutsche Bank and Coutts.”

Another business with a long history in the city is Investec Wealth & Investment, a brand which arrived in Liverpool in 2011 as part of a name-change that saw the Rensburg Sheppards name disappear.

Under various guises, the company has a history in Liverpool stretching back to 1873. Today, the Investec Wealth & Investment office in Liverpool looks after a significant sum of private wealth across the region and is a major arts benefactor.

“Liverpool’s performance in the wealth management space is a real achievement,” says David Owen, senior investment director at Investec, “and has to be set against the reality that Manchester has enjoyed a more vibrant and entrepreneurial economy, with more embedded strength.”

Mr Owen believes that global economic uncertainty has proved an opportunity for the wealth management sector and, by extension, for Liverpool-based advisors as a whole. “The downturn has caused people to re-evaluate relationships and question whether the people are providing value,” he says. “These are extraordinary times,

with situations like the eurozone producing the sort of financial crisis you might expect in a time of war. People need more advice, not less.”

John Hall, chief executive of Professional Liverpool, says “Competition has been good for Liverpool and the fact is that the city has punched well above its weight for some years, especially given the relative economic difficulties the city had faced for a decade or two. Wealth management expertise adds significantly to the city’s overall professional services offering and complements its expertise in other areas where it has been traditionally strong.”

Liverpool’s track record in wealth management delivers softer benefits for the city, according to Max Steinberg, chief executive of economic development agency Liverpool Vision. “The professional and client relationships which these businesses bring are of immeasurable value to the city,” he says, “part of an influencer network which aids our overall inward investment and business growth agenda.”

For Liverpool, it is a case of back to the future – using historic strengths built in the 19th century to drive forward growth and prosperity in the 21st century.

From left: Simon Walker, senior partner at Cheviot Asset Management, with partners Nigel Hibbert and Mark Ewer

David Owen of Investec

Regional airports ready to ease the strain

B

ritish Airways, Virgin and Ryanair spent much of last year criticising the Government position on aviation, with Michael O’Leary, the chief executive officer of Ryanair, summing up their collective view. “The Government keeps increasing air passenger duty,” he said, “and then blocks all airport expansion.”

This year’s Budget signalled some apparent concessions: the Chancellor hinted at more capacity for South East airports, despite such proposals being ruled out when the coalition Government came to power.

The air has yet to clear in terms of how this lobbying for more infrastructure in the South East will impact on airports in the North of England.

The next round of consultation is now expected after the London mayoral election. Two separate consultations are in progress, one on the Government’s wider aviation policy, the other calling for evidence on proposals for a Thames Estuary Airport. The Government hopes to have a policy in place by 2013.

Manchester Airports Group (MAG) is not expecting any major change to the pol-

icy trajectory. “While the policy itself is under review,” said Neil Robinson, corporate affairs director at MAG, “the Government has made its intentions clear in terms of capacity growth. It wants the London airports to be ‘better not bigger’ and regional airports to help ease the strain.

“We support the Government’s ambition of rebalancing the economy, and stand ready to help ease the strain on the London airports. But this cannot be achieved simply by constraining the South East airports and letting the market do the rest. If the Government is serious about rebalancing, there need to be some public policy interventions to correct the market.

“These could include open skies in the UK regions, reform of air passenger duty to better reflect its impact on the regions and provide an economic incentive for airlines to use existing capacity, a revised regulatory regime to better address the impact of the ‘network effect’ – particularly of Heathrow – and ensuring that airports are connected to the high-speed rail network. Without action, the congested London airports will simply get busier, while regional airports are left behind. This is

precisely the opposite of what the Government is seeking to achieve.”

Manchester Airport has benefited directly from public sector backing in the form of a new Metrolink line – now under construction and due in 2016 – and a new road scheme to improve access via the A6.

The MAG Airport City scheme was also recognised by the Government in last year’s Budget, when it was designated as the focal point of one of the next generation of enterprise zones. Much progress has been made since then – and at the official unveiling event for the Airport City scheme in January, George Osborne described Manchester Enterprise Zone as the best developed and most advanced of any of the 24 enterprise zone schemes.

The construction company Morgan Sindall has a big stake in the airports sector and is currently on site with building projects at nine of the UK’s 15 regional airports. These schemes include state-ofthe-art new air traffic control towers for both Manchester and Birmingham. Morgan Sindall built the £73 million North Terminal extension at Gatwick, which opened last October, and is also deliver-

ing a programme of works at Heathrow.

These upgrades include a new T2A terminal, one of the first of a new generation of “eco” terminals. It will draw a minimum of 20 per cent of its energy from a renewable source and is designed to have a considerably reduced carbon footprint compared with the old building.

The Government’s transport policy has a clear emphasis on the green agenda and Michael O’Callaghan, director of aviation at Morgan Sindall, believes it could do more to recognise the efforts made by commercial aviation to mitigate the environmental impacts of flying. “The focus on reducing the carbon footprint is very real,” he said, “and the argument that halting UK expansion will mean that the extra flights will disappear doesn’t make a great deal of sense. The flights simply move elsewhere.

“We do live an era of global connectivity and some political will to help UK airports compete would not be amiss. Frankfurt has just opened its fourth runway and Charles de Gaulle and Schiphol are all increasing the frequency of their connections to Asia and South America.”

Morgan Sindall is building the new traffic control tower at Manchester Airport

the times | Tuesday April 3 2012

13

Business Insight

Legal services

Evolution or revolution on the high street?

The Legal Services Act has created opportunities by allowing legal services to be delivered outside of traditional structures, writes Gavyn Innes

T

he Legal Services Act (LSA) has already ushered in a new era for the visibility of legal advice on the high street. From sales points for QualitySolicitors springing up in branches of WHSmith, to the advent of online legal document production sites such as the Googlebacked Rocket Lawyer, the “Tesco law” tag which was quickly applied to the LSA appears to be coming true.

Attention has focused largely on alternative business structures (ABSs), new regulations that remove traditional ownership restrictions and allow legal services to be delivered outside of the traditional law firm structure.

While there has generally been consensus over predictions of Andrew Perry, rapid conchief operating solidation officer at SAS in disciDaniels

plines such as conveyancing, personal injury and probate, views on the impact of ABSs in the commercial sector are not as harmonious. Indeed, in the arena of business law, ABSs have generated a mixture of confusion, apathy and complacency.

The recent introduction of “fixed fees” is just one example of innovation in the legal sector. This demonstrates that the impact of the LSA on the commercial market might not be as far off as some would believe. While it may be unlikely that many firms will take such a radical approach, some are already taking a more proactive view of the realities of a new legal market.

Nowhere is this view more apparent than at North West law firm SAS Daniels, one of the first medium-sized practices in the country to apply for ABS status. Andrew Perry, the firm’s chief operating officer and the first of two nonlawyers to be appointed to its partnership, says the move is in anticipation of the impact of the LSA on firms operating in the business–to-business arena.

“There is every indication that the major consolidation predicted on the high street will also be coming our way,” Mr Perry says. “We are alive to the possibilities and, as a predominantly corporate firm, we believe we should attempt to drive the bus now, rather than risk being run over by it in a year’s time.”

He claims that adopting an ABS is all about the need to behave more like a business, stripping out the unnecessary cost and mirroring the structure of its clients in an effort to better deliver on their needs. But it is also about the ambition

of SAS Daniels to grow from its current four offices into a larger operation.

“Our goal is to become a top 100 law firm and stay within that elite group,” Mr Perry says, “so we need a strategy that delivers sustainable expansion. ABS will help by allowing us to look for and attract external investment, without needing to rely solely upon our equity partners. It will also allow us to attract the best people with the right skills to continue to drive the firm forward, be they lawyers or not.”

Many firms taking advantage of ABSs are expected to move towards multi-disciplinary practices, through acquisitions and mergers with businesses in complementary sectors, such as accountancy.

Barney Leaf, a partner in the Manchester office of Laytons Solicitors, thinks this is likely, but he also believes the arrival of the LSA will encourage the market to innovate even further.

“The LSA has sharpened solicitors’ thinking in relation to how we do business and who are our business partners,” Mr Leaf says. “On a more bespoke, non‘commodity’ service basis we could see corporate finance houses incorporating accounting and legal services to enable such an organisation to offer a more complete package to their clients, where they are buying or selling businesses or dealing with listing exchanges.”

Not everyone is as positive about the possibility of such marriages of disciplines, however. Paul Hyland, a partner with Liverpool-based DSG chartered accountants, articulates a concern shared by many professionals about the possible

impact of ABSs on the quality of advice being offered in the market.

“The essence of a professional is somebody with skills in a designated field that allow them to offer best advice to clients,” says Mr Hyland. “This single-minded approach may be lost as we begin to see funeral directors offering will-writing and investments advice while burying their client’s dead. One need only look at the mis-selling scandals that have engulfed Britain’s banks to see what happens when professionalism is eroded.”

Andrew Perry of SAS Daniels shares the sentiment that diversifying into other disciplines might be a step too far, too quickly. “We have specific growth ambitions within the legal market, but that strategy does not currently include branching out into other disciplines,” he says. “I think firms taking that route run a real risk of over-extending themselves, growing too quickly and diluting the strength of their offer to clients. Any acquisition activity we make has to dovetail with our existing core values and make our business stronger, not just bigger.”

Be it revolution or simply evolution, things are certainly changing quickly in a sector which is normally characterised by its adherence to tradition.

For Andrew Perry, it is a chance for the legal market to align itself with the clients they are representing. “The single greatest upshot of [the LSA] could be the dawn of a new spirit of enterprise not previously witnessed in the legal sector,” he says, “as forward-thinking owners begin to spread their wings into new and uncharted territories.”

Paul Hyland

The LSA has sharpened solicitors’ thinking in relation to how we do business

Dictating the pace of change in document production

By Lucille Richards.. . . . . . . . . . . . .

T

he legal sector is not especially known for its groundbreaking innovation – but necessity, as the saying goes, is becoming the mother of invention so far as law firms are conJayne Smith cerned. The recent Legal Services Act, combined with the economic climate and the emergence of non-legal competition, has forced lawyers to look at improving their business practices, refining costs and enhancing profitability.

One North West business capitalising on this changing landscape is Document Direct, which has brought together the emerging use of digital dictation, outsourcing trends and the ever-increasing confidence of secure internet and mobile transmission of data and sound files to

offer legal firms a leading-edge service in document production.

By integrating Winscribe digital dictation technologies and developing business process management tools, Document Direct receives dictations directly from its legal clients to secure UK-based servers and is able, within hours, to return properly formatted and accurate documents to the original authors.

The impact on the legal process is significant, with firms able to respond more quickly to their clients, shorten their work-in-progress time and improve billing cycles. They are also able to look at their own cost bases across their secretarial and property overheads.

Lawyers have been outsourcing audio transcription for many years, but the quality and availability did not always mean an improvement to the lawyer’s working day. With the advent of secure internet and mobile transmission, the potential for outsourcing has improved immeasurably.

Hill Dickinson LLP, one of the oldest and most long-established legal firms in the UK, has acknowledged efficiency gains and significant savings from its overhead and office space expenditure, thanks in part to support from Document Direct.

“Having used Document Direct for 18 months,” says Hill Dickinson human resources (HR) director Andrew Rushworth, “we have found their service invaluable. We now have greater flexibility and capability and are now increasingly able to get the best from our resources both physically and financially. We continue to deliver an improved quality and efficiency of service to our clients, and Document Direct have played a key role in helping us with their expertise and friendly ‘can do’ approach to our business.”

Martyn Best, chief executive officer of Document Direct, suggests that law firm partners, owners and managers excel at what they have been trained at, whether that be the practice of law, developing business, managing HR issues or dealing with information technology (IT) challenges.

“However, if you had wanted your lawyers to be a typist or a workflow allocation manager,” Mr Best says, “they would have gone to a different place than law school. Increasingly, lawyers are looking to outsource those functions and services, often in

operational areas, where they do not have expertise.

“We at Document Direct are a classic example of this. We excel at what we do and as a result are one of the fastest-growing companies in solely UK-based document production and 24/7 support. Our experts have a passion for document production, and our clients love this professionalism and enthusiasm. Our core skills focus around the typing, formatting and production of any document, letter, report or pleading, using digital dictation, secure encryption, customised personal service – and, most key, a total focus on what you as lawyers and as a valued customer require.”

In order to build a sustainable business, the company has designed proven business critical workflows to improve internal communication, improve turnaround times of document production and enable detailed auditing and reports for our clients.

“Our focus on systems makes a huge difference to the level of customer service clients receive,” says Jayne Smith, operations director at

Document Direct. “The fact that we provide typing is a given – that doesn’t distinguish us above what lawyers already have. What does make us special is that we bring ourselves into every firm and workplace environment, and with carefully developed systems and protocols ensure we mirror what our clients already have and ensure we support their operation 24/7.

“We are able to achieve this due to considerable investment in document production workflows and processes which are now inextricably linked to our assessed ISO 27001 Information Security Management System, which also encompasses our recruitment and training programmes.

“Our systems consistently track the progress of each piece of work and provide detailed reports to our clients. As a consequence, our already high-quality document production specialists are able to deliver a consistent service to every client whilst retaining the personal approach which is vital within the culture of every law firm.”

Tuesday April 3 2012 | the times

14

Business Insight

Infrastructure

By 2016, Manchester’s tram network

By Helen Nugent

M

anchester’s Metrolink marks its 20th birthday this year and has reason to celebrate.

By 2016 it will be the largest tram network in Britain, thanks to an expansion which is the single biggest investment in public transport in the UK outside of London.

Councillors, businesses and residents believe the enlargement and improvement of the light rail system will provide Greater Manchester with a lasting legacy of regeneration and transformation. Key districts in the conurbation will be revitalised and new connections to the labour market will benefit both employees and employers. On completion, the network will cover 97km of track, have 99 stops and be served by a fleet of 94 trams. Bosses envisage a daily ridership of approximately 190,000, up from 55,000 today.

The scale of the vision is a far cry from the genesis of the tram system back in 1984. At the time, the proposals consisted of three lines radiating from the city centre at an estimated cost of £42.5 million.

“There was very little connectivity between north and south Manchester [in the 1980s], said Councillor Andrew Fender, chair of the Transport for Greater

Manchester Committee. “It was a longstanding problem that people in Manchester had an aspiration to solve.”

In the early 1980s, Manchester City Council considered a number of transport options. Officials came to the conclusion that conversion of existing track was the best option and work started on the Metrolink in 1991.

“Now Manchester is renowned for having a very successful tram system, Manchester is the model,” Cllr Fender said.

“When we have full expansion [in 2016], it will treble the size of the network.”

The first phase, happening this year, will nearly double the size of the Metrolink network. Four new lines comprising 20 miles of new track and 27 new stops will go to Oldham and Rochdale, Chorlton and Droylsden. The first of the new extensions, to MediaCityUK in Salford Quays, was opened in September 2010. It is predicted that these lines alone will result in five million fewer car journeys every year.

Further expansion will, as Cllr Fender stated, treble the size of the existing layout. For the first time, Ashton-underLyne in Tameside, Didsbury in Manchester, Oldham and Rochdale town centres and Manchester Airport will all be connected by light rail. A second city crossing is also planned.

Sir Richard Leese, the Labour leader of Manchester City Council, believes the Metrolink is vital to the future prosperity of the region. He also points out that this part of the North West is growing and better transport has been one of the driving factors. “There is lots of evidence that transport is a key element of economic growth, particularly in the knowledgebased economy,” he says. “Employers look for access to a highly skilled workforce. So the expansion should be a real boost to the city.”

The first phase cost £600m, including a £244m contribution from the Government. Further expansion is priced at £805m, with a Government contribution of £121m.

Funding plans date back to 2009. In May of that year, the establishment of a special pot of £1.5bn was agreed for 15 transport schemes across the area. This was the Greater Manchester Transport Fund and included the Metrolink extensions and a second route across the city centre. Investment was confirmed in July 2010 and the programme as a whole is forecast to generate 21,000 jobs.

The money is coming from a combination of central Government grants, a “top slice” from Integrated Transport Block local transport plan funding over a period of nine years, some £775m from a collec-

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the times | Tuesday April 3 2012

15

Business Insight

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Although the scale of the 2016 tram network will soon be in evidence throughout Greater Manchester, perhaps the most noticeable section of the new track will be the city centre Second City Crossing. Costing £50m, this line will be built subject to securing Transport and Works Act and planning approval, which is currently forecast to be in 2013.

Under the plans for the Second City Crossing, the additional line will run from the Deansgate-Castlefield stop (formerly G-Mex), through the centre of the city before rejoining the existing Metrolink line just outside Victoria Station.

Critics have questioned the need for a second tram line in the heart of a busy city centre. But adherents of the plan say it will properly integrate transport corridors in Manchester and make it easier to get around. As the impact of all the funded Metrolink extensions and service enhancements will be to treble, by 2021, the number of passengers accessing the city centre by tram, this will give rise to the need for additional capacity at the core of the region. Planners are confident that the Second City Crossing will improve reliability of all Metrolink services, including the new routes, and provide flexibility to serve special events. They also hope that a second line will reduce disruption caused by future maintenance and renewals in the city centre.

However, the tram network’s enlargement will, at some point, have to stop.

“There will be a limit to tram expansion,” said Sir Richard Leese, “as, for it to work, the routes have to come through the city centre. We will [eventually] run out of capacity. We need a second line but there is nowhere to put a third.”

Re

By 2016, Manchester will have the largest tram network in Britain

tion of borrowings undertaken by the Greater Manchester Combined Authority (to be repaid from future Metrolink net revenues), the annual ring-fenced levy contributions and from other local and third parties.

More recently, Manchester has won £500m from the European Investment Bank (EIB) to increase the tram network. The EIB accompanied its announcement, made in October 2011, with the comment that it was fulfilling a promise to support sustainable public transport in leading European cities.

Andrew Stokes, chief executive of Marketing Manchester, said: “The Metrolink [expansion] will change people’s travel-to-work patterns, fewer people will be going into work by car,” he said. “It will change property values in key areas. But it is also something that will be of benefit to Manchester and its leisure market. People will have the ability to get in and out of town more easily and that will really benefit the night-time economy. If you look to the future, that really opens up Manchester to tourism.”

Mike Blackburn, chairman of the Greater Manchester Local Enterprise Partnership, believes the tram expansion will boost business in the region. “This is a big bang expansion,” he said. “It will make a significant change because it will make it easy and simple for people to get from one side of the city to the other.

“This will be a huge draw for employers. The tram opens up a bigger catchment area for employers. They won’t just be limited to the immediate proximity around where they are opening up a business.”

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