CBI 3 UK Spotlight

UK SPOTLIGHT

CBI: 50 Years of Business Innovation | chapter name

“Management skills in the UK are improving, albeit from a low base. There is a growing cohort of brilliantly managed companies that can compete on the global stage�

Sir Richard Lambert Banking and finance Energy and power Manufacturing, services and innovation Creative and media Regional growth

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UK SPOTLIGHT

CBI: 50 Years of Business Innovation | uk spotlight

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Sir Richard Lambert | First person

British business is lean, mean and ready for lift-off Sir Richard Lambert Director-general of the CBI, 2006–2011

Two years after the CBI was set up, Rolls-Royce,

The textiles and leather industry alone employed

The second shift was privatisation, which

a member of the FT30 blue chip club, offered

810,000 workers in 1966. Many industries were

started in 1982 with the low-profile sale of

its new RB211 engine to the American aircraft

owned by the state and there was little capital

National Freight Corporation but quickly caught

manufacturer Lockheed for its TriStar passenger

in the merchant banking sector available for

fire with sales of major transport companies,

jet. It fought off competition from General Electric

businesses. Sleepy old companies could carry

power generators, household utilities, telecoms

and Pratt & Whitney to win a contract for 150 units

on for decades without challenge.

and, eventually, the rail industry. The CBI was a champion of this as it could see that having

but with a stronger thrust and lower price than originally planned.

Structural changes

these industries run efficiently would give the

Within two years, the company was struggling

The Britain of today is plainly in a far more

UK a competitive advantage.

to meet the performance guarantees it had

positive state. It has a good number of world-

The third impact was the removal of

committed to due to a fault with a new titanium

leading industries and companies, a thriving

exchange controls in 1979, which enabled the

blade that threatened to double development

and innovative financial services sector,

City of London to trade freely in foreign securities

costs. Rolls-Royce went into receivership in

even after the crash, and a strong culture

and British industry to buy overseas assets more

1971 and was nationalised by the Conservative

of entrepreneurship and innovation. There are

easily. It was a fundamental change in the way

government of Ted Heath. After 16 years in

four structural shifts, and a gentler, more

the economy worked and was in part driven by

state ownership, Margaret Thatcher privatised

organic transformation, that explain where

the fourth factor – the discovery of North Sea oil

the company in 1987. Rolls-Royce is now

we are today.

and gas. This had a huge economic impact but

a world-leading aerospace company and its

The first key factor is increased competition

it also provided the foundations for a large and

Trent engine, the descendant of the RB211,

driven by globalisation and Britain’s late entry

flourishing sector, covering everything from the

is in service in Airbus A380s and several

into the Common Market. The textiles producers,

major oil companies, to smaller manufacturing

other aircraft.

for example, were swamped by the arrival of

firms, to consultancy services.

This story of riches to rags to riches

overseas low-cost importers and struggled to

again is a useful metaphor for the journey

respond. Auto manufacturers, who had relied

Innovation revolution

that British business has taken over the past

on a protected home market and the old

For these same reasons, innovation has swept

50 years. Back then, Britain was dependent

Empire, were hammered by much more efficient

to the top of the agenda for smaller companies.

on heavy industries and processing businesses.

competitors from continental Europe and Japan.

It is not just an issue of hi-tech versus low-tech: »

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CBI: 50 Years of Business Innovation | uk spotlight

if you survived and flourished through this

Within our vast and dominant services

Business champion

period of dramatic change you had to have

sector, we have some world-class performers.

The CBI sees its role as championing the business

an innovative and entrepreneurial flair.

The UK represents more than half of the

environment in which such companies can flourish.

Management skills in the UK are improving,

premier international law firms, has a major

This includes lobbying for tax incentives and

albeit from a low base. There is a long tail

role in the accountancy profession and has a

our instrumental role in helping establish the

of poorly managed companies but a growing

huge specialism in both consulting engineering

Technology Strategy Board, as well as our work

cohort of brilliantly managed companies that

and architecture, where it is frankly the

with the Patent Office over the years. But the

can compete on the global stage.

dominant world player.

CBI has also been active in supporting the wider

As a result, Britain has a large number

The UK has a strong automotive sector

business environment, in which bright people

of internationally competitive industries and

that, like Rolls-Royce in the aerospace

can strive, fail, try again and succeed.

companies. The City has always been a highly

business, emerged from the ashes of a poorly

So what’s the winning formula for a successful

innovative place and is now one of the leading

managed industry, large parts of which had

business? I would put it down to two key ingredients.

international financial centres – which is one of

to be nationalised before it was transformed,

The first is an entrepreneurial energy and relentless

the reasons why the UK was so seriously affected

albeit this time by foreign investment. I visited

quest for innovation that can adapt to the incredible

by the financial crisis. Britain boasts a broader

a Mini factory in the 1970s and, more recently,

shortening of products’ life cycles. The second is

financial service sector that is a huge contributor

BMW’s Mini site, and the two were not 40 but

a genuine sense of purpose for what companies

to our balance of trade. Where things went wrong

120 years apart. In 1965, the UK’s creative

are trying to achieve. Successful managers and

was to make maximising shareholder return

industries largely amounted to the BBC and

employers alike wake up in the morning with a

every quarter a priority. When the crisis struck,

Reuters. Today, they are both still around but

goal of building something that customers will

the CBI was a place where policymakers could

are complemented by literally thousands of

want. The CBI has always been clear that this

go to articulate responses during the heat of

companies across a wide range of activities

purpose of business is to create a healthy society

the crisis that took account of the needs of both

— some of which have risen up from nowhere

and generate the wealth that the country needs

banks and their customers.

in a short space of time.

if it is to be successful in the long term.

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Sir Richard Lambert | First person

“If you survived and flourished through this period of dramatic change you had to have an innovative and entrepreneurial flair�

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CBI: 50 Years of Business Innovation | uk Spotlight

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Banking And Finance | in focus

Banking on success Banking And Finance

Britain is one of the world’s leading centres

Despite the role of the capital, it is essential

Wholesale markets offer funding for larger

of global financial services. Its success is vital

to remember that banking and finance is much

businesses to enable them to operate more

– not just to the UK’s international standing

more than just a London industry. It employs more

efficiently and fund major transactions, as well

but to ensure the financing needs of British

than 2 million people, of whom two thirds are

as to help them manage their capital and reduce

businesses and households are met.

based outside London. People across the UK work

the risks of doing business. Companies that need

in the financial sector, from asset management

to invest to grow their business are unlikely to be

Fifty years ago high-street banking was

and pensions in Scotland to general insurance

able to do so from their cash flow. The financial

the domain of bank managers like Captain

and banking in the South West and the cluster

markets enable them to raise capital in the form

Mainwaring from BBC TV’s Dad’s Army while the

of financial, accounting, legal and management

of bank loans, or by issuing shares or bonds in »

City of London was full of bowler hat-wearing,

consultancy firms in the North West.

brolly-carrying stock market traders with titles such as “jobber” and “broker”.

Financing for growth

Fast-forward half a century and the majority

As one of the UK’s world-class sectors, the

of people do their daily banking via their mobile

financial services industry contributes around

phone while the City of London – which has

10 per cent to our GDP. It also plays a critical

extended east to Canary Wharf – hosts bankers

role in maintaining a healthy economy by

from across the world carrying out complex

supporting UK businesses. An efficient

financial transactions as well as share trading.

financial system is one that helps businesses

While the deregulation under the “Big Bang”

to invest and grow.

shake-up of the City in 1986 and more recent

A sound financial system underpins

financial innovations have made these advances

activity in every part of society. Retail finance

possible and reduced costs for users, the

offers day-to-day banking, savings and loans

industry is still reeling from the aftermath of the

to individuals, families and small businesses.

global financial crisis, which hit the UK severely.

It also provides private pensions that play an increasingly large role in workers’ long-term

HSBC’s Canary Wharf HQ (opposite) is a world away

savings, and a range of insurance products

from Captain Mainwaring’s bank manager (right)

for people’s homes, cars and travel.

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CBI: 50 Years of Business Innovation | uk Spotlight

the public markets. Because London is a global financial centre it gives customers access to a global pool of liquidity.

“ A healthy economy needs an efficient financial system to help businesses invest and grow”

Since the most recent recession there has been a dramatic decline in the volume of bank

bank rescue package that was used to bail out

abolished the Financial Services Authority and

lending to businesses. While there is major debate

Royal Bank of Scotland and Lloyds Banking

established the Prudential Regulatory Authority

over whether this is due to resistance by banks

Group, which both remain partially state-owned.

to regulate around 1,700 financial firms and the

to lending at affordable rates or lack of demand

A number of smaller banks and building societies

Financial Conduct Authority to regulate conduct

by firms, it is clear that the UK will benefit from

were also taken over.

related to the marketing of financial products.

alternative sources of finance. In its 2013 report,

The scale of the crisis has highlighted the

The European Commission has embarked

Ripe for the Picking, the CBI showed that the

importance of having comprehensive and smart

on a major financial markets reform – the

crisis put the UK on an irreversible path to a “new

financial regulation to deliver financial stability

review of the Markets in Financial Instruments

normal” in financing. Regulatory reform, balance-

and prevent a build-up of risk – while ensuring that

Directive – that the CBI has welcomed. It has also

sheet restructuring and a more realistic pricing

markets operate efficiently. Regulations drawn up

worked on new rules covering a host of activities

of risk, mean that traditional bank debt will no

in the UK, European Union and globally affect

including derivatives, alternative investments,

longer be the right finance for all businesses,

Britain’s banking and financial industry. As CBI

retail investment funds and insurers, and has

all of the time. The report included a clear guide

director-general Richard Lambert said in the

established a European System of Financial

to alternative sources of finance such as peer-

2010 Annual Report: “We have been working with

Supervision. Meanwhile global regulators have

to-peer lending and crowdfunding, supply-chain

our members to develop proposals for the kind

worked on the Basel III regulatory regime for

finance and the retail bond market.

of regulatory reforms that will allow the banks

major banks.

to once again stand on their own two feet.”

There is clearly further to travel down

Reform and regulation

The UK government has implemented wide-

the road to regulatory reform, and financial

The global financial crisis of 2007/08 led to the

ranging reform of the financial services industry.

innovation continues apace. Now the worst of

near collapse of several UK institutions, starting

At its heart was the 2013 decision to establish a

the crisis has passed, the CBI will work with

with the run on Northern Rock. It prompted the

new regulatory framework. This gave the Bank

national and global policymakers to ensure that

government in 2008 to launch a £500 billion

of England responsibility for financial stability

the financial system can provide the lending

and a new financial stability committee to take

consumers and businesses want. It’s something

action to remove or reduce systemic risks. It also

Captain Mainwaring would doubtless applaud.

Opposite: The banking sector is adopting reforms

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Banking And Finance | in focus

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CBI: 50 Years of Business Innovation | uk Spotlight

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Energy And Power | in focus

Fuelling economic growth Energy And Power

Energy is the lifeblood of business, so access

source of export and taxation income, boosting the

it was used for military-grade plutonium. The first

to cheap sources of electricity and power is

UK’s balance of payments by £32 billion in 2012 and

prototype reactor was rolled out at Dounreay, at

essential for economic growth. In the meantime

generating £6.5 billion in tax revenue in 2012/13.

the northern tip of Scotland, in the 1960s. The UK has 16 reactors generating about 18 per cent of

rising energy costs mean firms must constantly seek alternative sources and find ways to cut

Nuclear power

its electricity and all but one or two, depending

their energy needs.

This trend has highlighted the need for the UK

on regulatory approval, of these will be retired by

to set out a long-term framework for energy

2023. The government aims to have the first of

A major development in the supply of energy

that ensures energy costs remain affordable for

a new stream of reactors on line by 2023.

to the UK came in 1965 – the same year that the

business while taking account of the need to meet

In 2012, 363 billion kWh (TWh) of electricity

CBI was established. The UK Continental Shelf

ambitious targets for reducing carbon emissions.

was produced in UK. This was made up of:

Act had come into force in May 1964 and the

Gas plays a crucial role in supplying our heat

•7 0 TWh (19 per cent) nuclear

following year saw the first discoveries of gas

and electricity needs, having been the largest single

•1 00 TWh (27.5 per cent) from gas

in the West Sole Field and the Viking Gas Field.

source of energy in the UK since 1996 and meeting

•1 44 TWh (40 per cent) from coal

Initially, uptake was hampered by regulatory

more than a quarter of our energy demand. As well

•1 9.4 TWh from wind

and market difficulties and the major breakthrough

as supplying gas-powered electricity generating

• 8 TWh from hydro

did not come until 1968 when Phillips Petroleum

stations, it is also the main way we heat our homes,

• 17 TWh from biofuels and wastes. »

discovered oil in the central North Sea and in

office buildings and industry.

1970 when the giant Forties, Piper, Frigg and

More than a third of electricity comes from

Brent oilfields were discovered. The North Sea

coal-burning power stations. However, a third

was open for business.

of these power stations are expected to close by

According to the offshore industry, 42 billion

2016 so the UK meets EU air-quality legislation.

“barrels of oil equivalent” have been extracted on

Since the shrinking of the UK coal mining industry

the UK continental shelf over the subsequent four

in the wake of the 1984/85 miners’ strike the UK

decades. Oil and gas production from the UK sector

has imported coal and, indeed, overseas supplies

of the North Sea peaked in 1999 and is now in

provided 79 per cent of the coal used for electricity

slow but steady decline. However, it is still a major

generation in 2009.

The arrival of nuclear power in the UK also

Opposite and right: Coal is still the UK’s largest source

tracks the life of the CBI. Calder Hall was the

of electricity, but we have a played a key role in the

first nuclear power station in the world to supply

development of alternatives such as wind

electricity on a commercial basis in 1956 although

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CBI: 50 Years of Business Innovation | uk Spotlight

“ Britain has played a key role in the development of energy and power sources, from nuclear to renewables” Decision time

same time, it will be vital that government and

An estimated £110 billion private-sector

business continue to focus on energy efficiency

investment is needed to secure and decarbonise

while ensuring that badly formed policies do

our power system. In December 2013 the Energy

not drive energy-intensive industries overseas.

Bill – the legislation intended to drive the biggest

The success of fracking – or hydraulic

transformation of our energy market since

fracturing – in the USA, which is now a net energy

privatisation – finally became law after two

exporter, highlights the potential of this admittedly

and a half years of consultation and debate.

controversial energy source. Proposals for fracking

With a fifth of our generating capacity coming

in Balcombe, East Sussex, have emphasised the

offline in the next few years, the Energy Bill offers

negative public perception this technology can

a once-in-a-generation opportunity to remake

raise. In a 2013 report, Fuelling Growth, the CBI

Britain’s electricity market and unleash investment

said it was vital that industry proactively engaged

into new energy infrastructure. It should nurture

with local communities to educate them about how

a growing mix of low-carbon electricity generation

risks are managed and to dispel myths about the

including nuclear and renewables, while

industry and its processes. Successful exploitation

encouraging carbon-capture technologies

of this resource would generate additional jobs

and the storage of carbon dioxide emissions.

and future tax revenues, it added.

Britain has played a key role in the

Energy security will be a major issue for

development of energy and power sources, from

policymakers and businesses especially in the

nuclear and oil and gas in the 1960s through to

light of the rising geopolitical tensions in Ukraine

more controversial sources today like shale gas

and the Middle East last year. In a 2009 report,

and renewables such as onshore and offshore

Decision Time, the CBI warned that the UK was

wind farms and solar and tidal power. But, at the

headed for an uncertain energy future. It is clear that ensuring Britain’s energy system remains

Opposite: With the decline of North Sea oil and gas

reliable and affordable is vital to the country’s

production, investment in new energy is vital

long-term economic competitiveness.

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Energy And Power | in focus

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CBI: 50 Years of Business Innovation | uk spotlight

The shift from manufacturing to services has been an overarching theme of the UK’s economic development for 50 years, but it conceals a more

From manufacturing, to services, to manu-servicing

complex picture. Britain has developed worldleading positions in key value-added sectors and established a reputation as a home of innovation.

The way Britain does business has changed utterly over the last five decades. Innovation has altered how people work, not just simply in terms of the technology they use but in the way that the

Manufacturing, Services And Innovation

modern workplace is organised. Huge factories employing thousands of men and women in basic manufacturing activities that were common in 1965 – whether making metal products, food, cigarettes, consumer goods or clothing – are no more. Whole industries such as shipbuilding and coal mining have all but vanished.

But the last 50 years have seen a continual push by British entrepreneurs towards finding new ways of doing things. Spurred by the spike in energy prices in the 1970s and encouraged by deregulation and technological innovation, businesses have sought to find ways to do these in a more imaginative and efficient way in order to secure a competitive advantage.

Innovation ecosystem Britain has a range of world-class industries that are led by research and development (R&D) such as pharmaceuticals, aerospace and defence.

One could describe these as manufacturing or services: either way it’s clear that a modern innovative ecosystem is key to economic growth.

Whether it is a producing groundbreaking medicine, designing and making wings for Airbus aeroplanes, or building a winning Formula 1 car, British businesses have a leading edge. It’s an edge that has constantly to be sharpened to ensure they stay ahead of global competitors.

The UK has earned an international reputation as a centre for expertise in design that echoes its historic role as a prime driver of innovation in the industrial revolution. According to the Design Council, the sector contributes £15 billion to the British economy. Most UK design consultancies » As entire industries such as shipbuilding (left) have vanished from the UK, aerospace firms (opposite) have found creative ways to secure a competitive advantage

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Manufacturing, Services And Innovation | in focus

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CBI: 50 Years of Business Innovation | uk spotlight

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Manufacturing, Services And Innovation | in focus

tend to be micro businesses selling their services nationally. A high proportion of the leading design firms in areas such as industrial design,

“ In many cases the value rests in the know-how and the intellectual property rather than in the manufacturing”

software development and architecture export their services around the world.

In one way the distinction between “services”

Financial services now offer a large

In many cases the value rests in the know-

and “manufacturing” is as obsolete as some of

range of services online and via mobile

how and the intellectual property rather than in

the industrial activity that took place 50 years

phones thanks to advances in ICT. The rapid

the manufacturing. A striking example is Dyson,

ago. Whether it is called “servitisation” or “

development of technologies such as near-

the manufacturer of vacuum cleaners and hand

manu-servicing”, there has been a radical change

field communication and smartcards means

dryers. While production largely takes place in

in the way firms offer the products they make.

it will become increasingly easy to move money

Malaysia the company has a large and expanding

Companies increasingly realise that firms do not

and pay for goods and services without cash

base in Wiltshire that has spent years researching

necessarily want a particular product but would

or credit cards. Within retail, barcode scanners

and designing innovative goods such as its digital

like the capability that the product brings. In other

linked to ICT facilities have led to improvements

motors that can power air at up to 430 mph.

words, they want to buy the outcome rather than

in distribution. Shops are introducing new

the equipment. For example, Rolls-Royce no longer

strategies to enable people to buy online and

Servitisation – or manu-servicing

simply sells aeroengines. It now offers a total care

collect goods from public spaces such as

But innovation can be as effectively generated

package, where customers buy the capability that

railway stations.

within the services sector as it can within

the engines deliver – or “power by the hour”.

Innovation is constantly advancing and

manufacturing. Whether in construction

Innovation at airports in terms of ground

offering new potential to change products

techniques, methods of retailing and distribution,

operations, coordination with the different bodies

and services. The UK is leading this change

or in knowledge-based services, innovation makes

involved and developments in technology have

through more open and collaborative models

operations work smarter rather than just harder.

enabled runways that have been declared full to

of innovation with business focusing as much

This has been shown to be the best route to

increase capacity year after year without building

on intangible aspects of innovation such

growth, with illuminating examples across

new runway space. Staying within aviation, the

as design as on pure R&D. As the economy

transport, retail and financial services.

growth of low-cost carriers such as EasyJet

rebalances, it is critical that the UK innovation

and Ryanair is the result of business model

eco-system continues to drive growth, develops

Opposite: Aeroengine manufacturers are also

innovation that has transformed the industry

new markets and helps tackle the major global

service industries, offering a total care package

and led to cheaper airfares.

challenges of our time.

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CBI: 50 Years of Business Innovation | uk spotlight

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Creative and media | in focus

An imaginative future Creative And Media

Britain boasts a rich heritage of writers,

the contribution of those who are in creative

Auto V – developed by Rockstar North, the

dramatists and painters, going back centuries.

occupations outside the creative industries

Edinburgh-based studio of the multinational

The fast-growing creative and media industries

as well as all those employed in the creative

company Rockstar Game – is the fastest-selling

in the UK are building on that base to establish

industries themselves, the impact is even

entertainment product of all time.

a global reputation in sectors ranging from film,

more significant. The wider creative economy,

The continued strong performance of British

television and music through to modern, hi-tech

which includes people carrying out creative

musical acts, such as One Direction, Adele and

activities such as computer games and design.

activities such as advertising for other

Tinie Tempah, was reflected in the £4.6 billion

businesses, accounted for 2.55 million jobs

of sales in 2012 by the music, performing and

in 2012, or one out of every 12 jobs in the UK.

visual arts industry, which exported £275 million.

When the hit science fiction film Gravity starring

The sector also includes museums, galleries »

Sandra Bullock and George Clooney won seven Oscars in 2014, many British filmgoers could be

Recession beater

forgiven for assuming this was another win for

The importance of the creative industries sector

Hollywood. The stars of the show were certainly

to UK plc is highlighted by the fact that it posted

American and the director, Alfonso Cuarón, was

strong growth during the recent financial crisis

Mexican. But the film was made at Pinewood

when the overall economy suffered a recession

and Shepperton studios near London and its

and, until recently, anaemic growth. The value

astonishing special effects were designed and

added of the sector has increased by 15.6 per cent

arranged by British post-production experts, who

since 2008, compared with an increase of 5.4 per

won Oscars for visual effects, cinematography,

cent for the UK economy as a whole. Creative firms

film editing and sound mixing.

exported £15.5 billion of services in 2011, 8 per

According to official statistics, the UK’s

cent of total UK service exports. Indeed, between

creative industries are now worth £71.4 billion

2009 and 2011, the value of its exports outstripped

per year or 5.2 per cent of the UK economy.

the rest of the export sector, growing by 16.1 per

They accounted for 1.68 million jobs in 2012,

cent, compared with 11.5 per cent.

or 5.6 per cent of British jobs. If one includes

While the film, television and radio industries

the wider creative economy, which includes

make up a large share of both job creation and economic growth, the largest sector is in fact

The UK’s creative industry continues to perform

the IT, software and computer services industry.

well, as the film Gravity (opposite) and global

It employed 791,000 people in creative jobs

superstar Adele (right) go to show

in 2012. The computer game Grand Theft

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CBI: 50 Years of Business Innovation | uk spotlight

“ The creative industries sector posted strong growth at a time when the overall economy suffered a recession” and libraries, many of which are state-owned

LucasFilm in 2013 announced that the seventh

and so do not show an economic output.

movie in the Star Wars series would be filmed

However, these institutions employ 108,000

in Britain. The tax relief, which requires that at

people and have scored considerable successes.

least a quarter of all production expenditure takes

For instance, the British Museum managed

place in the UK, can be claimed on production

to attract a record number of 6.7 million visits

spending in the UK, up to a maximum of 80 per

in 2013, up by 20 per cent on 2012.

cent of the total budget.

The success of the creative industries

Titanic hub

is a shining example of the ability of British

But the creative industry is not just a London

companies to combine business acumen

story. The UK’s creative industries are found in

with creative talent, aided by well-targeted

every region and nation of the UK and are thriving

government support. The CBI believes the

in a number of creative hubs, such as the Titanic

UK has the potential to be the leading exporter

Quarter in Belfast and MediaCityUK in Salford.

across all areas of creative content by 2025.

These clusters mean large companies form

In its 2014 report, The Creative Nation, it set out

networks with a wide range of smaller creative

a five-point strategy on copyright, competitive

firms across a range of sectors that attract talent

markets, access to finance, apprenticeships and

and help generate new ideas.

opening up overseas markets to achieve that.

The decision by the government to offer

The UK has the potential to cement its

tax breaks to companies filming in the UK

position as the world’s leading creative hub

– an idea proposed by the CBI – has helped.

provided we take steps now to build on existing progress and ensure that all the underlying

Right: Salford’s MediaCityUK is one of several

industries involved have the foundations in

creative hubs thriving across the country

place for long-term success.

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Creative and media | in focus

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CBI: 50 Years of Business Innovation | uk Spotlight

Angst about an economic divide between the North and South of the country is as old as the CBI itself. But one lesson from the past five decades is that policymakers should focus on maximising the potential within regions rather

Conquering the great divide

than trying to close the gap between them.

In 1962, three years before the creation of the CBI, Prime Minister Harold Macmillan warned that Britain needed to “prevent two nations developing geographically, a poor north and

regional growth

a rich and overcrowded south”. Concern over a North–South divide has always been with us.

Policymakers and the CBI have long been aware of a gap between the south of England – often seen as falling below a line drawn from the River Severn near Bristol to The Wash in East Anglia – and the rest of the UK. Whether measured by rates of economic growth, levels of unemployment, house price rises or social indicators such as the different levels of longevity between different regions, there are marked differences.

Successive Westminster governments have sought to even out growth between the South and the rest of the country. There has been a series of moves by central government to ensure that regions benefit from government policies. These have included the Enterprise Zones of the 1980s, the Government Offices for the Regions established in 1994 and abolished in 2010, the regional development agencies created in 1998 and abolished in 2010 and more recently the local enterprise partnerships (LEPs).

Government has also sought to close the gap directly by relocating civil services units to other parts of the country. For instance the review in 2004 by Sir Michael Lyons led to the move of more than 20,000 civil service jobs out of London and the South East. However, this mostly affected executive agencies and armslength bodies rather than the core activities of Whitehall departments.

London calling More recently the North–South divide has been recast as London versus the rest. London is one of the few genuinely global capitals and is often referred to as a city-state. By far the largest city and home to parliament, the civil service and the

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regional growth | in focus

judiciary – and the hub for finance, commerce

South, which means they have to work harder to

expansion. The emergence of the West Country as

and the arts – the capital exerts a gravitational

create private-sector investment and employment

a financial centre for back office functions following

pull on financial and human resources from the

to offset the impact of the austerity programme

the relocation of Eagle Star (Cheltenham), Allied

rest of the country.

launched in 2010. Yet the majority of infrastructure

Dunbar (Swindon) and Portman Building Society

While a lot of the south of England gets a

investment is focused on projects such as

(Bournemouth) is a good example. Leeds too has

great benefit from the economic power of the city,

Crossrail, Thames Tideway and the regeneration

benefited from financial services regeneration.

there are some parts of that region as separate

of Battersea while the major debate has been

Manchester, a birthplace of the industrial

from London as are towns in the north of England,

over the location of new London airport capacity.

revolution, has reinvented itself after the 1996

Scotland and Wales. Figures for growth in gross

IRA bombing to become a regional business centre and economic powerhouse. »

value added, a similar measure to GDP, indicate

New geography

London showed growth of 100 per cent between

The North–South or London-versus-the-rest

1997 and 2010. Wales grew by 60 per cent.

debates obscure the fact that there are many

Opposite: Harold Macmillan warned of a North–South

Some regions have much higher levels of

successful businesses and industries in every

divide. Above: Gateshead’s Angel of the North has

public-sector employment than London and the

part of the UK and great potential for further

become a symbol of regional pride and regeneration

059

CBI: 50 Years of Business Innovation | uk Spotlight

Similar examples of structural transformation

City regions are areas into which people

are visible in almost any major town and city in

commute for work, around which benefits of

the UK. Former factories have been turned into

what economists call agglomeration build up and,

headquarters of major services companies, derelict

most importantly, are the places where private-

industrial areas are now homes to business parks

sector activity takes place. Around three quarters

and former dockside areas have become popular

of Britain’s private-sector workforce is located

living quarters in such cities as Plymouth and

in cities and their hinterlands. This does not

Cardiff. All regions and cities have had to deal with

mean that cities are the only areas with potential

the impact of deindustrialisation – some of the

for economic development – there is also huge

regional gaps are a reflection of how successful

business potential in smaller towns and rural

they have been in meeting that challenge.

areas – but cities are a useful organising

In a major 2012 report, The UK’s Growth

geography around which to base a range

Landscape: Harnessing Private Sector Potential

of policy decisions.

Across the Country, the CBI said successive

The current debate over devolution and

governments had overlooked pockets of private-

demands for greater regional autonomy in the

sector potential because economic policy focused

wake of the Scottish referendum and the high

on levelling out the gaps between regions, rather

profile that two mayors of London have given that

than realising and maximising the potential

post are only likely to increase. The CBI believes

within them. It said that future policy should

there is a strong need for LEPs to have greater

focus on identifying and nurturing hubs of

powers and more responsibility for their funding

private-sector growth.

while ensuring that they are better integrated with local further education bodies, Enterprise Zones and City Deals. Investment should

Driving force

be focused on improving regional transport

These hubs are more likely to be based in a city

connections. Policymakers should consider

and its surrounding area rather than across the

the case for localising public-sector pay over

region as a whole. The success of the Nissan

the long term, to improve public service delivery

car factory near Sunderland in the North East is

and create a more level playing field for the

a good example, as is Honda’s facility in Swindon

private sector. Based on those reforms, Britain

in the South West and Toyota at Burnaston in

can look forward not to a country divided in

Derbyshire, East Midlands. Indeed the CBI has

two but one made up of a jigsaw of regions

pointed out that private-sector employment in

with an equal amount of potential and ambition

Sunderland grew by 10.5 per cent between 1998

to succeed.

and 2008, almost three times the wider North East rate of 3.6 per cent.

•

Right: Cardiff Bay – one of the UK’s most successful examples of post-industrial regeneration

060

regional growth | in focus

061

CBI: 50 Years of Business Innovation | UK SPOTLIGHT

A relationship you can bank on The Access Bank UK www.theaccessbankukltd.co.uk

When speaking to any representative of The

confirmation for LCs (letters of credit) issued

“We do not focus primarily on transactions,”

Access Bank UK Ltd, there is no mistaking

by the parent bank in Nigeria had been obliged

says Simmonds. “We want to truly understand

the pride and enthusiasm that surrounds

to take them elsewhere. This meant, from a

the needs of our customers and develop strong

the enterprise. Its decision to specialise in

customer viewpoint, that they were not receiving

relationships with them. This will enable us to

relationship banking, and its astute and prudent

the optimal level of service that the bank would

provide products and services that meet their

handling of the affairs of its customers, has

have wished.

specific needs.”

enabled the company to attract and retain

The parent company’s long-established

Trade Finance, which accounts for up to

an impressive client list − both individual and

reputation for probity ensured that the approval

70 per cent of its income, is the most substantial

corporate. As a result, it has built up a highly

needed from the FSA was obtained more swiftly

of the company’s SBUs. From an initial focus on

successful operation in less than a decade.

than for any other Nigerian bank. By October

confirming LCs issued by the parent company

When The Access Bank UK was founded

2008, operations were under way to deliver the

in Nigeria, Trade Finance has diversified, and

in 2008 as a wholly owned subsidiary of the

initial objective: to attract and grow trade-finance

now has a number of other key income lines.

Nigerian Access Bank Group, its primary

activity. Early recognition by the World Bank’s

For example, one increasingly profitable activity

purpose was to obtain a licence to operate

commercial arm, the IFC, as a confirming house

has been in acting as a correspondent bank

within the UK. Until then, customers seeking

for LCs, has also been integral to the progress

for sub-Saharan banking groups needing an

of The Access Bank UK.

OECD presence.

In the few short years since its founding,

Being the first Nigerian bank to be accredited

The Access Bank UK has experienced a near

by the Central Bank of Nigeria (CBN) has made

doubling in the ratio of its LC acceptances.

possible another important income stream –

“When we first started, around 50 per cent of

involvement in government infrastructure and

the LCs would accept our confirmation,” says

energy contracts. Petroleum production is an

CEO Jamie Simmonds. “Now that figure is

important source of dollar revenue for Nigeria −

closer to 98 per cent.”

and increasingly for Ghana, too − and when help is needed with the confirmation and issuance of LCs,

062

RELATIONSHIP banking

it is to The Access Bank UK that they frequently

The Access Bank UK is formed of four strategic

come. In cases where risk is to be shared across

business units (SBUs): Trade Finance, Commercial

banks for large transactions, The Access Bank UK

Banking, Asset Management and Treasury.

is able to participate in and lead syndications. »

The Access Bank UK | business profile

063

CBI: 50 Years of Business Innovation | UK SPOTLIGHT

“Nigeria is a huge opportunity for UK- and Europebased businesses.

We’re uniquely placed to introduce them to the right people”

064

The Access Bank UK | business profile

The Access Bank UK’s Commercial Banking

behalf of each customer. The same employees

The Access Bank UK, it’s as if they were dealing

SBU was established to provide accounts for

also manage client relationships.

through one of the major UK banks, such as

high-net-worth Nigerian individuals, and

The bank’s Treasury SBU provides foreign

Barclays or HSBC.

corporates needing international payment

exchange services and manages its balance

“Being a subsidiary rather than a branch

facilities. The unit is active in offering long-term

sheet. Through careful management, it has been

ensures that we fully operate within the rules

placement strategies, and in providing property

highly successful and continues to grow at a rapid

and practices put in place by the UK Authorities,”

loans for investment properties in the UK. It also

rate, year on year. “We take a very moderate

says Simmonds. This level of service has helped

offers trade finance and expertise to the European

approach to risk,” says Simmonds. “The majority

The Access Bank UK win an impressive number

and Asian arms of Nigerian companies.

of our funds are placed with institutions that are

of awards. Pride of place are its Adam Smith

‘A’ rated and above − some 90 per cent of our

Award for Innovation in Treasury and its Investors

Asset management

balance sheet is placed that way. We deliberately

in People Accreditation.

The Access Bank UK’s Asset Management SBU

do not chase yield. The importance is the safety

acts as the offshore provider of private banking

of the money that we place, and we’re building

A GROWING ECONOMY

services to all of the group’s customers, with

a sustainable business on repeat fee income,

For UK and European businesses wanting to trade

the focus on high-net-worth clients. Unique

based on anticipating and meeting the needs

in Nigeria and surrounding countries, The Access

among Nigerian banks operating in the UK,

of our customers.”

Bank UK is ideally positioned to help. “It’s a part of

it provides a discretionary fund-management

The bank’s enthusiasm for sustainability also

the world that continues to grow,” says Simmonds.

service based around three currencies: the euro,

extends to its staff management. “Every employee

“And Nigeria, together with the rest of Sub-Saharan

sterling and the dollar. The bank is able to offer

has been personally interviewed by the executive

Africa, is a huge opportunity for UK- and Europe-

a range of risk classes to meet clients’ needs,

team and myself,” says Simmonds. “This has

based businesses. We’re uniquely placed to

and the product can be specifically tailored to

resulted in a low staff turnover. We progress

introduce them to the right people and to look

an individual’s needs.

people within their roles and through the

at the available opportunities.

The provision of in-house management

bank, while ensuring that clients experience

“Once a customer starts with us, it’s

services is unique to The Access Bank UK and

a consistent service.”

very unusual for us to lose them,” he adds.

it has extensive investment expertise, as well

All elements of the UK operation are

“Having experienced the service we provide,

as a chief investment officer and a deputy chief

ring-fenced. This is very attractive for many

they stay with us.” Much like those who actually

investment officer to handle specific assets on

clients, as it means that when they operate with

work for The Access Bank UK, then.

•

065

CBI: 50 Years of Business Innovation | UK SPOTLIGHT

When a chemical manufacturer was losing 630 gallons of oil per year through leakage from a boiler feed pump, it found that a bespoke seal from AESSEAL® could address the problem,

A global SEAL OF EXCELLENCE

saving them £17,000 a year.

Likewise, when a coal-fired power plant in the USA was having three or four failures a year on its primary air fan, forcing it to continually change the fan’s bearings, it called in AESSEAL to install a new seal. This ended up saving the plant

Aesseal www.aesseal.com

more than $80,000 in bearing replacement costs.

Hundreds of factories and power plants around the world have benefited from the expertise of AESSEAL. Based in Rotherham, the company has grown to become one of world’s leading manufacturers of mechanical seals, with more than 1,600 employees operating out of 77 locations in 37 countries. It recently celebrated its 31st consecutive year of sales and profit growth.

This growth is underpinned with a philosophy of customer service and innovation – a focus that has seen AESSEAL recognised as one of “The Innovators” in the London Stock Exchange’s 1000 Companies to Inspire Britain publication.

INVESTING IN SUCCESS AESSEAL has a commitment to invest more than 7 per cent of annual sales into research and development. “Our investment in R&D has seen the product range develop more than any other competing company worldwide,” says Stephen Shaw, Group Engineering Director.

As a result of this, AESSEAL has filed more than 120 patents in the last decade.

These include its LabTecta®66 range of products, which, according to a recent research study, can effectively be classed as having an infinite lifespan. More recently, the company launched the EasyClean™ seal support vessel, aimed at solving problems faced by manufacturers operating in the food, beverage and pharmaceutical industries. Product quality and process cleanliness are key issues in these areas, and the current options involve either compromising those standards or wasting millions of litres of water every year. EasyClean solves these issues with its detachable lower section, ensuring process cleanliness and product quality while significantly reducing water waste.

066

AESSEAL | business profile

CUSTOMER SERVICE Putting the customer at the heart of the business is a key element of the AESSEAL philosophy.

“ Our investment in R&D has seen the product range develop more than any other competing company worldwide”

“At AESSEAL we pride ourselves on exceeding customer expectation, meeting complex briefs

To deliver on such a promise requires talented

CO2 emissions and sending zero waste to landfill.

and the most challenging lead times,” says CEO

and dedicated employees. AESSEAL has invested

It has developed a wildlife sanctuary at its Rotherham

Jonathan Wilkinson.

in apprenticeship and career-development

headquarters, which is designed to divert water during

Customers will usually come to AESSEAL

programmes along with comprehensive training

flash floods and provide a home for local wildlife.

when having problems with an existing seal.

for all employees. The company also invests

“It is impossible to be excellent without being a

If they provide precise dimensions and detailed

heavily in state-of-the-art manufacturing facilities

good neighbour, a good partner and a useful member

information on pressure and temperature, the

and equipment – it has already acquired the space

of the communities in which we live and work,” says

company’s technical department will be able to

needed for future expansion as and when the

Group Managing Director Chris Rea OBE. It’s this

make them a unique replacement, with modular

market demands it.

spirit that has won AESSEAL dozens of awards and

technology allowing 10 million permutations to

In addition, AESSEAL has a strong community

the approval of hundreds of clients around the world

be made from its existing inventory.

and ethical focus, with a commitment to reducing

– and made it a truly British success story.

•

067

CBI: 50 Years of Business Innovation | uk spotlight

“Our future is built on our history,” says Daniele Romiti, CEO of AgustaWestland. This Anglo-Italian giant was formed in 2001 from the merger of two celebrated aviation companies with two centuries of expertise between them. Italy’s Agusta traces

Charting a new flight plan

its history back to the pioneering aircraft launched

by Giovanni Agusta in 1907, while Westland has been manufacturing aircraft at its base in Yeovil since 1915.

AgustaWestland, now a division of the hi-tech industrial group Finmeccanica, has traditionally

AgustaWestland www.agustawestland.com

produced military helicopters in the UK – from the seaplanes it built for the First World War campaign right up to the AW101 helicopter that featured in the recent James Bond movie Skyfall. Until five years ago, 80 per cent of its revenue was generated by the UK’s Ministry of Defence.

“It became clear that we had to realign the business in the UK to the changing market conditions,” says Romiti. “We had to diversify.”

While military orders will continue to play a large part in the company’s output, it is now increasing its design, development and manufacture of civilian craft, with the goal that 30 per cent of orders will come from the commercial sector.

A CIVIL SERVICE This decision was in response to the success of AgustaWestland’s new generation of commercial helicopters. It is led by the AW189, a new 8.3 tonne twin-engine helicopter that has been optimised for long-range search-and-rescue (SAR) missions, as well as offshore passenger transport. A final assembly line has been established at the Yeovil factory and is now producing these aircraft for Bristow, which has been contracted to operate the UK’s SAR service.

The AW189 is part of a family of helicopters that includes the AW139 and the AW169. They all share the same high-performance flight characteristics and safety features, as well as a common cockpit layout, design philosophy and maintenance concept.

“Customers are flying to make a profit, so aircraft reliability is absolutely crucial,” says Romiti.

“Our mission is to deliver the most capable and cost-effective helicopters on the market. We are continually improving our helicopters, introducing new technologies and the latest avionic systems to improve their effectiveness and enhance safety.”

068

AgustaWestland | business profile

“Our mission is to deliver the most capable and cost-effective helicopters on the market”

AgustaWestland also provides advanced

of a turboprop aircraft. It is set to achieve

training systems for its helicopters, including

civil certification in 2017, and is likely to have

virtual and ground maintenance trainers, Flight

demand from civilian and emergency service

Training Devices and Full Flight Simulators.

sectors. “We strongly believe in the tiltrotor,”

Currently, around 40 per cent of AgustaWestland’s

says Romiti. “It’s the optimal solution for a

revenue comes from the support and training

long-range and high-speed vertical take-off

services, an area it wishes to expand.

and landing aircraft.”

It also ensures a long future for the

FLYING INTO THE FUTURE

company’s UK base in Yeovil, where it remains

AgustaWestland is already looking to the future

the town’s biggest employer. With production

to ensure that it remains at the very forefront of

of the AW189 and development of the

rotorcraft technology. In 2012, it tested the world’s

AW609 benefiting from investment from

first unmanned all-electric “tiltrotor” aircraft,

the UK government’s regional growth fund,

known as Project Zero.

AgustaWestland is proving that it has a

The AW609 TiltRotor can take off and

bright future built upon a hundred years

land like a helicopter but fly at the speeds

of aeronautical achievement.

•

069

CBI: 50 Years of Business Innovation | UK SPOTLIGHT

An enduring vision with nature at its heart Center Parcs www.centerparcs.co.uk

It was in the 1960s when Piet Derksen had

company had become the UK’s leading short

to 1,500 new team members. Such employee

a dream. The Dutch entrepreneur – who ran a

breaks provider and, in June 2014, opened its fifth

development has seen Center Parcs achieve

sports shop near Rotterdam and a tent factory

“village”, Woburn Forest in Bedfordshire. It’s the

industry-leading rates of labour retention and

near Eindhoven – wanted to create an outdoor

culmination of a 10-year quest, a £250 million

long service, reflected in numerous examples

park with tents as a way of bringing his staff

investment and the work of some 1,200 people

of career progression up to the most senior

and their families closer to nature. Before long,

over the two-year construction phase.

levels in the company.

Piet realised that it wasn’t just his employees

Woburn Forest improves on the traditional

Ninety per cent of staff who work at Woburn

who enjoyed spending time with their loved ones

accommodation that welcomed guests at

Forest live within 15 miles of the village, while 40

in the great outdoors. The tents transformed into

Sherwood Forest in the 1980s, offering 625 luxury

per cent of employees fall into the 16-to-24 age

bungalows, the staff were joined by paying guests

lodges, a 75-bedroom hotel, Aqua Sana spa and

bracket. The economic importance of Center

and Piet’s single park evolved into Center Parcs.

six spa suites. Just two months after opening,

Parcs Woburn Forest to Bedfordshire is equally

“Here at the opening of Woburn Forest, we

the fifth village has already achieved occupancy

significant and it’s estimated that it, like the other

continue to embody the essence of Piet Derksen’s

rates of 95 per cent.

four villages, will generate in excess of £20 million

vision from more than 50 years ago,” says Martin

Center Parcs’ four other villages – Elveden,

for the local economy each year. Proof positive

Dalby, CEO of Center Parcs UK. “The values he

Longleat, Sherwood and Whinfell Forests –

that Piet Derksen’s original community-led dream

stood for are just as, if not even more, pertinent

operate at virtually full capacity throughout the

is very much alive and kicking, more than half

and relevant to today’s society.”

year. Such success is about more than seamless

a century later.

The lure of the forest – complete with luxury

operations and logistics – the real success behind

lodges, more than 200 indoor and outdoor

Center Parcs is its people.

activities, a Subtropical Swimming Paradise and

Each of the five villages sits at the heart

an award-winning spa – now attracts more than

of a small community. Its employees are the

two million guests each year across the company’s

lifeblood of the business and Center Parcs is

five UK locations. “It provides families with a

often the biggest employer in the local area.

haven in which to escape the hustle and bustle of

As of August 2014, Center Parcs UK employed

everyday life and reconnect with each other,” says

more than 7,500 people across its five villages

Dalby. Indeed, the 365-day-a-year operation has

and head office.

survived two recessions and continues to grow.

An investor in people Short-break Leader

The company prides itself on investing in and

Center Parcs UK was created in 1987 at Sherwood

developing its staff. When Woburn Forest opened,

Forest in Nottinghamshire. Within 28 years, the

more than 84,000 hours of training was delivered

070

•

Center Parcs | business profile

“It provides families with a haven in which to escape the hustle and bustle of everyday life and reconnect with each other�

071

CBI: 50 Years of Business Innovation | UK SPOTLIGHT

Tomorrow’s engineering today Costain www.costain.com

This year, Costain celebrates its 150th anniversary.

“Our customers choose us to deliver

unearth not just the game changing “big I”

It’s one of the UK’s oldest and most respected

technically challenging and innovative engineering

Innovations, but also the “little I” innovations

names in the worlds of construction and civil

solutions that improve the performance of their

that can make a big difference but can often

engineering, with an unrivalled reputation for

business,” says Tim Embley, Group Innovation and

be developed or implemented more quickly.

implementing innovation and creating market-

Knowledge Manager. “Engineering Tomorrow is

“If any employee has a good idea, they’ve

leading solutions.

central to that approach. It’s a business philosophy

got the full backing of the company,” says Embley.

This approach to business and innovation is

that aims to bring together skilled people, advanced

To this end, Costain Start-Up was launched in

enshrined in its Engineering Tomorrow strategy,

processes and leading ideas for the benefit of

2012, inviting employees to submit their ideas

which aims to bring together the company’s

the customer.”

to help create, launch and support innovative solutions across the company.

values and vision – and its commitment to meeting the UK’s most important national

Innovation and evolution

infrastructure needs.

A key element of the strategy has been to encourage SUPER MARIO

072

innovation at all levels of the business. From the

One of the successes of this initiative is

boardroom to the work site, the whole workforce

MARIO (Mass Asset Recognition and Intelligent

understands not only the importance of innovation

Optimisation), an asset-management tool

to the business but also to them individually.

that is now being implemented commercially

Over the last three years, the company

to rail and highways customers.

has also launched a number of initiatives that

Developed in-house, MARIO gives clients a

support Engineering Tomorrow. These include The

cost-effective and accurate picture of the condition

Costain Way, an online risk-based management

of their infrastructure assets. MARIO uses a

system that strengthens best practice across

scanner attached to a vehicle to collect data,

the business, and Costain Cares, which aims to

and that data is then used to calculate the location

address greater corporate responsibility, including

and condition of assets. To date, 15 projects

health and safety, professional development and

have been completed for customers, ranging

environmental issues.

from airports to motorways.

These initiatives bring employees and

Another example is COdemand, which

members of the supply chain together to

the company launched in March 2014 to deliver

Costain | business profile

“Our customers choose us to deliver engineering solutions that improve the performance of their business”

“demand response” solutions to its customers.

and organisational initiatives, as well as

Demand response is defined as any service that

our skills-based training and our bid to be

allows the demand of energy to be shifted in

more socially responsible to the needs of

order to help manage fluctuations in electricity

our stakeholders.”

supply and demand on the grid. COdemand helps

All of these initiatives support Costain’s

customers reduce their exposure to future rises in

Engineering Tomorrow strategy. It recognises

energy prices by earning revenue from managing

that, to satisfy the national need for quality

their assets in a smart and sustainable way.

infrastructure, the company needs to invest

“Now in our 150th year, we place even

in technology, devise new practices and pass

more emphasis on innovation,” says Embley.

on crucial knowledge, both internally and to

“This can clearly be seen in our technological

its customers.

•

073

CBI: 50 Years of Business Innovation | UK SPOTLIGHT

“we can help ensure that the county’s world-beating innovations continue to grow and evolve for decades to come”

074

Hertfordshire LEP | business profile

At the Herts of the action Hertfordshire LEP www.hertfordshirelep.com

Hertfordshire sits at the heart of the UK’s “golden

“Hertfordshire is supported by a knowledge

Innovation mix

research triangle” of Oxford, Cambridge and

economy,” says Witcombe. “There is very low

Hertfordshire’s powerhouse organisations include

London, making it perfectly placed for knowledge-

unemployment, with very high-skilled jobs and

GlaxoSmithKline (whose main clinical research

based growth. This strategic location at the core of

real powerhouses in terms of global names

facility is in Stevenage), Rothamsted Research

UK science gives it an edge. “An incredible amount

who operate here.”

(a world leader in agricultural and crop research

of world-beating innovation takes place here,”

The county is also very well connected,

that has called Hertfordshire home for nearly

says Paul Witcombe, Enterprise and Innovation

with three international airports on its borders

170 years) and Hertfordshire University.

Manager for Hertfordshire Local Enterprise

as well as three major strategic corridors –

The county is also a centre for media and

Partnership (LEP), “from the manipulation of

the M1/M25, the A1(M) and the A10/M11.

new technology. Elstree Studios, BBC Elstree

cells to the creation of new drugs.”

Hertfordshire LEP’s Strategic Economic

and Leavesden (the UK home of Warner Bros

Based in Welwyn Garden City, Hertfordshire

Plan has identified four key priorities in the

studios) are all based in the county, and

LEP is one of 39 LEPs across England charged

pursuit of smart growth: maintaining its global

Imagination Technologies – best known for

with driving growth forward in their respective

excellence in science and technology; harnessing

the mobile graphics processors used in Apple’s

regions. Its Strategic Economic Plan (SEP),

its relationships with London; reinvigorating

iPhone – is a home-grown Hertfordshire business.

Perfectly Placed for Business, sets out a long-

its places for the 21st century; and laying the

In addition, Airbus Defence and Space, a leader

term blueprint for smart growth in the area.

foundations for growth. Already home to around

in space and satellite technology, has been in

55,000 businesses, the county is particularly

Hertfordshire for 60 years.

Growth Strategy

strong in life sciences, the creative sector,

“Hertfordshire has a highly innovative

Hertfordshire’s economy is currently valued at

advanced manufacturing, engineering and

business base,” says Witcombe. “The role

around £27 billion and accounts for 2 per cent of

business services.

of the LEP is to build on our unique strengths

all UK economic output on a total employment

“We have a rich mix of assets that encourage

and capabilities and increase the overall rate of

base of 600,000 jobs. By 2030, Hertfordshire LEP

innovation,” says Witcombe. “For instance,

economic growth. We aim to become the third-

will help leverage more than £370 million of

Hertfordshire is one of the biggest contributors to

ranking location outside London. By putting

private-sector investment and deliver a £3 billion

pharmaceutical manufacturing. More employees

Hertfordshire’s businesses at the heart of local

uplift in Gross Value Added. This is anticipated

in the world of biopharma are working here than

decision-making we can help ensure that the

to deliver an additional 38,600 jobs above official

anywhere else in the UK, and twice as many as

county’s world-beating innovations continue

forecasts for jobs growth in the area.

in Oxford and Cambridge combined.”

to grow and evolve for decades to come.”

•

075

CBI: 50 Years of Business Innovation | UK SPOTLIGHT

The guiding principle that HSBC instils in its staff is to act with courageous integrity.

“Courage comes from the French word coeur, meaning heart, so it’s about the entire being that is HSBC,” says Dan Howlett, Head of Large

Investing in hearts and minds

Corporates for Commercial Banking at HSBC UK. “We have to make decisions based on doing the right thing by our customers and our people.”

Global reputation

HSBC www.hsbc.co.uk/business

Given the heightened levels of scrutiny the banking industry now faces, qualities such as courage and honesty are especially important for a company with a worldwide reputation to maintain. Founded in 1865 as the Hong Kong and Shanghai Banking Corporation, HSBC has spent the past 150 years building up a business that ranges from personal finance to investment banking. Indeed, this year marks a milestone anniversary that Howlett describes as a “fitting opportunity” to review how HSBC has evolved over time and how it will continue to invest in its future as one of the largest banking and financial services organisations in the world.

Inspiring confidence in customers and protecting one’s reputation is central to the long-term success of any company, and Britain’s biggest bank is no exception. At HSBC, this means embracing regulatory reform – designed to make banking safer – by working with organisations such as the CBI and regulators.

The focus is firmly on investing heavily in new people, processes and systems to address any historic shortfalls in anti-money laundering and sanctions compliance.

“We need to ensure that we work with our customers so they feel confident – putting them first is always a priority,” says Howlett. “We want to improve our reputation, and the only way to do this is to eliminate errors and get better at running your business. The way forward is about governance and working in a way that means customers never doubt HSBC’s integrity.”

ETHICAL STANDARDS In order to demonstrate its commitment to transformation, HSBC has been working since 2011 on programmes to foster a “speak up” culture among its 250,000 members of staff.

076

hsbc | business profile

“We have to make decisions based on doing the right thing by our customers and our people”

In June 2013, it launched a global scheme

knowledge that they will be heard. This is further

called Ask The Right Questions, a training

promoted through Exchanges – a regular forum

programme that has taken two years to put

where the agenda is set by staff, who are then

together and which analyses challenges

able to voice any concerns and views face-to-face

that the bank has experienced in the past.

with senior executives.

Good as well as bad behaviour is defined to ensure everyone at HSBC has the “right level

Employee exchange

of understanding” and that all employees

“It’s not just me turning up and speaking to

“have the chance to do the right thing”,

400 people – it’s about listening to individual

according to Howlett.

concerns,” says Howlett. “It comes back to

The aim is to cultivate a culture of openness

ensuring that we’re building a sustainable

whereby employees can share their views in the

business model. Our purpose is to enable »

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CBI: 50 Years of Business Innovation | UK SPOTLIGHT

businesses to thrive and for economies to

companies. To meet their demands better, the

how to support British export growth and

prosper, helping people to fulfil their hopes

bank has split its business into three different

also issued a Manifesto for British Exports.

and dreams and to realise their ambitions

areas: Business Banking, MMEs (mid-market

This set out practical steps that HSBC

– without such a values-based framework,

enterprises) and LCs (large corporates) to

believes government, financial institutions

that’s not possible. We’re trying to be

provide the right level of solution. It’s a strategic,

and trade associations need to take to

a responsible organisation, globally.”

tailored approach that the bank has taken in

help Business Banking grow and export.

Every customer has different needs

an effort to ensure customers get the very best

According to Howlett, there has been

and HSBC’s commercial banking arm works

service for their very different business needs.

movement on several of the areas where HSBC recommended action including the

with everyone from start-ups to the FTSE 100

078

HELPING BUSINESSES

simplification of visa processes, improving

Headquartered in Canary Wharf in London,

access to export finance and helping

HSBC’s international network has grown to

businesses come together to target

comprise over 7,000 properties in more than

major export opportunities.

70 countries and territories in Europe, Asia

The process of transformation at HSBC

and North and Latin America, as well as the

is ongoing – it has to be because the bank’s

Middle East and North Africa.

customers are always changing. “There will

British businesses often need to be able to

never be a point where we can stop what we’re

operate globally too, and HSBC has helped them

doing and say the job is now done,” says Howlett.

do just that. In 2013, the company’s International

“If we create a sustainable model then we can

SME Fund lent nearly £5 billion to more than

live with the realities long term. We go beyond

19,500 small- and medium-sized British

the shareholders – it’s about supporting

enterprises that are trading or aspiring

communities and the environment.”

to trade overseas.

Banking can be a risky business but,

In the same year, it established an export

as Howlett knows, engaging hearts as well

advisory council to discuss issues such as

as minds can change it for the better.

•

hsbc | business profile

AC31185

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CBI: 50 Years of Business Innovation | UK SPOTLIGHT

Delivering high-quality metals for cars, aircraft, ships and assorted hi-tech industries on a global scale, the Knight Group has earned a reputation as an established and trusted partner, vital to

Outstripping the competition

manufacturers around the world.

The Knight Group’s primary company, Knight Strip Metals (KSM), has been in business for 75 years. Initially established as E A Knight & Sons in 1940 in North London, KSM has been expanding ever since. In 1958, the company

The Knight Group www.knight-group.co.uk

moved to new premises in Potters Bar, but the continued growth of the business, supplying a wider range of precision strip metal products to an ever-expanding customer base in hi-tech industries, demanded even larger premises, so the company moved again to its present prime location in Cranborne Road, Potters Bar. A EUROPEAN SUCCESS STORY The business expanded massively in the 1970s.

“Britain’s entry into the European Economic Community in 1973 opened up new opportunities for us,” says Brien Knight, Chairman of the Knight Group. “It enabled us to branch out into Belgium in 1973 and expand our European export activities.” Today, the group’s Precision Metals EU serves France, Germany and the entire western European region.

The UK site at Potters Bar was further enlarged and developed between 1980 and 1990 to accommodate two other companies.

Knight Precision Wire produces fine, flat and round wire in a range of metals, and associate company Sterling Springs specialises in presswork and spring manufacture.

The acquisition in February 1998 of Arenastock Ltd of Letchworth, Hertfordshire, added tubing, bar, rod and plate to the group’s range of products. The further acquisition of the long- and well-established Charles Harbage Processing in September 1999, and its relocation to Saltley Business Park in Birmingham, gave the Knight Group the widest range of precision strip processing in Europe.

“At the Knight Group, we meet professional requirements with a personal approach,” says the Chairman, “offering an expansive range of high-quality metals with a bespoke service and reliable delivery.”

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The Knight Group | business profile

“We pride ourselves

LOOKING ahead

and expanding the stock of strip and wire. It is

The Knight Group has exported its products for

hoped that customers, both old and new, will

many years and now regularly services some

profit from the quality and service they can

47 countries around the world, while still satisfying

rightfully expect from the Knight Group.

a growing home demand. “We pride ourselves on

During the past two years, the shareholders

our progressive planning and our ability to grasp

have appointed a new management team to

requirements demanded by

the innovative requirements demanded by new

further develop the financial performance of the

and complex technical advances,” he continues.

group, and the provision of high-quality precision

technical advances”

“It is this ability that has enabled us to support

metals of all types and any size, especially

on our progressive planning and our ability to grasp the innovative

new developments in a wide range of industrial

for aerospace and similar hi-tech applications.

sectors including aerospace, defence, electronics,

A considerable amount of capital will be invested

petrochemical, engineering and communications.”

over the next few years for extra facilities, and

The role of the specialist independent

a new plant and machinery in Birmingham.

stockist and processor is vital to many sectors of

“We hope to provide benefits to customers,

industry, as the ever-changing pattern of specialist

employees and shareholders,” says the group’s

requirements become more and more demanding.

Chairman. “It will ensure that the Knight Group

The company has responded by improving facilities,

will prosper into the next decade and beyond.”

• 081

CBI: 50 Years of Business Innovation | UK SPOTLIGHT

Technology affords businesses numerous benefits, including a global customer base, but it can also bring with it many hazards. Whereas in the physical world, a protester might loiter outside a shop with a banner and make it difficult for customers to

Managing the cyber security risk

enter, in the electronic world that same protester can round up global support to flood a retailer’s website so that genuine customers can’t get through. Whereas in the physical world, a disgruntled ex-employee would need 10 lorries to wheel out sensitive files, in the electronic world

KPMG www.kpmg.com/uk/cyber

all they need is 10 minutes and a memory stick.

KPMG – a leading provider of professional services – wants companies to feel free to pursue their business aspirations, safe in the knowledge that their cyber security is up to scratch.

“The benefits of technology still hugely outweigh the risks,” says Stephen Bonner, a Partner in the cyber security team at KPMG. “But it’s about managing those risks, not avoiding them. Organisations should carry out a proper risk assessment and ask what they have of value, what their threats are and what would be an appropriate level of protection. They don’t want to overspend and let it get in the way of successful growth but, if they don’t take cyber security seriously, they risk losing customer confidence.”

RISKY BUSINESS In assessing that risk, there are four main types of cyber attacker to consider: organised crime; nation states; hacktivists, and current and ex-employees. “Most of my work is with financial services organisations whose principal threat is from organised crime,” says Bonner. “As banks get better at defending themselves, cyber attackers look to other organisations, such as retailers, and use their customer records or credit card numbers to commit fraud.”

Until recently, payment fraud only affected large corporates, but now small and mediumsized enterprises across almost every industry are falling victim. “Many SMEs have an onlineonly presence,” says Martin Tyley, another Partner in KPMG’s cyber security team. “This has many advantages, but it makes these firms particularly vulnerable to cyber attack.”

There are, however, smart ways for SMEs to access cyber security. “You don’t need to hire expensive resources,” says Tyley.

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kpmg | business profile

“Government departments offer practical

supported, or tolerated, by governments who

plan their bidding strategy and maximise the

guidance on basic measures with documents

are motivated by political, diplomatic, military,

value of their resources.”

like ‘10 Steps To Cyber Security’ and ‘Cyber

or economic benefits,” says Bonner. “If you’re

Sabotage by nation states – using electronic

Essentials’. We’ve seen with clients how a

holding sensitive government information

hacking to disrupt a country’s electronic processes

relatively small investment can reap big rewards.”

– say if you’re a defence contractor – then

– is a relatively new threat. Stuxnet, for example,

you’re likely to see extensive espionage into

was a computer worm used by Israeli agencies

National threat

your systems. Likewise, countries selling

to attack Iran’s nuclear facilities. “There’s concern

Espionage from nation states has also grown

natural resources may break into the systems

that other nations will develop that capability,”

in the last couple of years. “These are people

of the country bidding for them, so they can

says Bonner, “and then target nations, like »

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CBI: 50 Years of Business Innovation | UK SPOTLIGHT

the UK, who are more dependent on electronic systems for their way of life.”

The most visible type of cyber attacker,

“ The things people would never dream of doing in the physical world, they feel comfortable doing in the electronic world”

however, is the hacktivist. “The man that used to stand outside an AGM with a banner is now much

feel comfortable doing in the electronic world,”

and helps its clients to do the same. “At the

more likely to build a group on social media and

says Bonner. “Staff feel that the work stored on

moment, most systems handle information,”

launch a cyber attack to express his anger,” says

their laptop is their data. Good salespeople have

says Bonner. “But the trend that’s coming is

Bonner. “If small hacktivist groups are able to

always tried to take their Rolodex with them when

that networks are being connected to physical

cause disruption, it implies that nation states

they moved. Now it might be their Outlook folders.

things, such as medical systems and self-

or organised crime gangs could do the same.”

The difference with the electronic system is the

driving cars.” There will be enormous benefits

Many of the attacks from hacktivists and

scale. The impact on a firm tends to be lower but

from this connectivity, but it also presents

nation states are DDoS (distributed denial-of-

the prevalence is high. The good news is that if

new challenges.

service) attacks. With a giant global network

a business implements a system that protects

“Self-driving cars have great benefits,”

of computers, attackers flood a business’s

them from insiders, that same system does a

says Bonner. “But, if I could hack into them,

system with false requests, giving legitimate

good job of protecting against external attackers.”

I could have a traffic jam delivered to your

users a slow or unavailable service. “They may

A small amount of preparation can make a

headquarters – sort of a ‘spam jam’. We have

also delete systems, alter dates or do anything

huge difference when countering cyber threats.

to apply the lessons we’ve learnt in the online

to attack the availability of systems,” says

UK banks have seen big reductions in credit card

space to the new physical space in which

Bonner. “It is difficult to permanently defend

fraud as they have stepped up cyber security, and

we operate.”

against, because attackers can always recruit

now other firms are countering cyber threats.

Cyber security is a risk to be managed, not

more people.”

“We’ve done a lot of work with the International

eliminated. “If you strip searched everyone that

Information Integrity Institute (I-4 Forum), which

came into your shop,” says Bonner, “you would

THE EX FACTOR

brings together firms to share knowledge,” says

have a low rate of shoplifting, but you would

Many organisations won’t be targeted by

Bonner. “In those trusted environments, we find

also have very few customers. However, if

organised crime, nation states or hacktivists, but

out the true threat and help firms ensure they’re

organisations add cyber security to the portfolio

all firms are vulnerable to the gripes of current

not overspending.”

of risks they manage well and apply the right

and ex-employees. “The things people would

KPMG keeps abreast of the threats

controls, they can look forward to another

never dream of doing in the physical world, they

presented by the evolving electronic world

50 years of growth.”

084

•

kpmg | business profile

085

CBI: 50 Years of Business Innovation | UK SPOTLIGHT

Squaring up to the new energy challenge National Grid www.nationalgrid.com

In the 1960s, the UK’s energy landscape looked

USA, National Grid is an international electricity

economic benefits of fossil fuels in the energy

very different from that of today. Power stations

and gas network company at the heart of one of the

mix while still reducing carbon emissions.

capable of producing around 2,000 megawatts

sector’s biggest challenges – meeting ambitious

had just come on stream and the energy mix was

low-carbon energy targets while securing an

Investment in NEW GAS

almost entirely coal and oil, with nuclear power

affordable energy supply for generations to come.

North Sea gas supplies are in decline and the UK

only just becoming a reality.

“The future holds excellent investment

has become more dependent on gas imported

Today, energy has become front-page news

potential for National Grid,” says Stephanie

from Europe. New sources are emerging, however,

and pressures increase on the energy sector

Hazell, Director of Corporate Strategy & Business

including shale and renewable gas. The latter,

every day from climate change, population

Development. “As well as investment in our existing

also known as methane-based gas or biomethane,

growth, resource depletion and the increasing

networks, there are exciting opportunities such

is a form of biogas that can be produced from

demands of technology and industry.

as the development of transportation networks for

organic waste such as food waste and sewage.

“The reliable supply of energy by National Grid

CCS [carbon capture and storage], the expansion

National Grid has already commissioned

over the past 50 years has been fundamental for

of our Isle of Grain terminal and interconnection

its first commercial food waste biogas project –

our economy,” says the organisation’s CEO Steve

with the rest of Europe via subsea electricity links.”

a £20 million anaerobic digestion plant at Widnes,

Holliday. “Delivering this for the next 50 years will

CCS – the process of capturing carbon dioxide

Cheshire, which will help fuel thousands of local

require us to work very closely with both customers

waste at its source and preventing it from entering

homes and businesses. Operated by ReFood, the

and stakeholders, and invest significantly in our

the atmosphere – can play an important role

plant is capable of processing 120,000 tonnes of

networks, people and new technology. We’re up

in decarbonising the UK’s future energy mix.

waste food a year, producing 180 million kilowatt

for the challenge.”

For many industries, such as iron and steel,

hours of gas – enough for 10,000 homes.

it is the only decarbonisation pathway.

Liquefied natural gas (LNG) is a vital

Transforming the sector

In preparation for the deployment of CCS,

component of the UK’s energy supply and

As the “pipes and wires” of the energy sector,

National Grid Carbon is applying its expertise

is significantly easier to transport and store.

National Grid plays a vital role in connecting

to design, build and operate safe and effective

Located at the Isle of Grain in Kent, Grain LNG

millions to the energy they use – safely, reliably and

high-pressure gas pipelines. CCS helps preserve

is Europe’s largest gas storage terminal and

efficiently. Based in the UK and the Northeastern

energy security by retaining the industrial and

the eighth largest in the world. National Grid’s »

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National Grid | business profile

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CBI: 50 Years of Business Innovation | UK SPOTLIGHT

“We’re inspiring the next generation to take on the big challenges, to contribute to society and deliver the changes required in the 21st century”

088

National Grid | business profile

£1 billion investment has increased Grain LNG’s

works very hard to minimise any impact on

the gas main through a single excavation and

annual importation capacity to 14.8 million

our lives when new infrastructure is built, or

– under the control of a trained operator above

tonnes – equivalent to 20 per cent of the UK’s

when repairs and maintenance are undertaken.

ground – seeks out and seals leaking joints.

gas demand – making it the UK’s leading LNG

While modernising and improving energy

importation terminal.

infrastructure is a crucial part of meeting

Educating future users

In addition, by doubling its interconnector

the challenge, this can affect the landscape

Meeting the energy challenge is not just about

capacity with mainland Europe – using subsea

and communities, so National Grid consults

developing technologies and bringing new sources

transmission cables that allow electricity to

widely to build consensus on these decisions.

of energy on line, however. “We’re inspiring the

flow between countries – National Grid believes

Overhead cables are always an aesthetic

next generation to take on the big challenges,”

the UK could unlock up to £1 billion of benefits

challenge and, together with the Department

says UK Executive Director John Pettigrew, “to

each year for energy consumers by 2020.

for Energy and Climate Change and the Royal

contribute to society and deliver the changes

Four existing links – to France, Ireland, the

Institute of British Architects, National Grid

required in the 21st century.”

Netherlands and Northern Ireland – total

launched an international competition in 2011

In 2013, National Grid launched Careers

4 gigawatts or around 5 per cent of existing

to create a pylon design for the 21st century.

Lab, a four-module programme designed to

electricity generation capacity. This level, however,

The winning design – created by Danish

respond to the growing gap between young

remains low. Increased interconnectivity with the

architects and engineers Bystrup – is the

people’s skills and the needs of business.

Continent could potentially evolve into a European

T-pylon. It is smaller and sleeker in design

Piloted in five Midlands schools, Careers

Supergrid that would facilitate trade and promote

and – unlike existing pylons – able to be

Lab introduces business ambassadors into

a more collaborative approach to energy supply.

routed in a way that follows the contours of

classrooms to deliver inspiring careers lessons

National Grid is also working towards a more

the land, without sudden changes in direction.

alongside teachers, and to help students think

collaborative approach to managing the UK’s

Similarly, the disruption of traffic and the

about the choices they make while at school.

electricity demand via Smart Grids. These systems

congestion caused by repairs and maintenance

Fifty years from now, the UK’s energy

use digital information and smart metering to link

of under-road infrastructure could be a thing

mix will be even more complex than it is

end-to-end energy sources and users in a much

of the past following National Grid’s history-

today, with power coming from a huge range

more intelligent and coordinated way.

making use of robotics to fix a leaking 18-inch

of renewable and non-renewable sources.

gas main under the streets of Camden in North

Wherever we end up, however, it’s certain

Minimising impact

London. National Grid drew upon the services

that National Grid’s efforts in meeting the

The scale of the energy transmission and

of repair robot CISBOT, developed by the New

energy challenge will have played a crucial

distribution networks means that National Grid

York-based firm ULC Robotics, which enters

role in helping us get there.

•

089

CBI: 50 Years of Business Innovation | UK SPOTLIGHT

Driving excellence across the UK Nissan www.nissan.co.uk

When Nissan opened its first UK plant three

NISSAN NATIONWIDE

“Securing the Infiniti Q30 for production at

decades ago, it prompted a fair degree of

The Sunderland plant remains the jewel in the

Sunderland was a tremendous achievement by

scepticism. The British car industry was in

crown of Nissan’s European operations, but the UK

the workforce,” says Trevor Mann, Nissan’s Chief

the doldrums, riddled with inefficiency and

is also an international base for Nissan’s design

Performance Officer. “It reflects the quality levels

poor labour relations, and few thought that

and development departments. Nissan Design

that everyone at Sunderland has reached.”

a Japanese firm could change that.

Europe (NDE), based in Paddington, west London,

“UK plants then had the worst productivity,

is a state-of-the-art creative hub responsible

A BRITISH TOUCH

the worst strike record, the worst quality and

for new model design right through to full-size

Mann, whose Nissan career began on

the highest costs,” says Sir Ian Gibson, who

clay modelling.

Sunderland’s production line in 1986, is one

was appointed by Nissan to set up their UK

Nissan Technical Centre Europe (NTCE),

of the many UK staff who have earned senior

operations. “But we knew there was no reason

based in Cranfield, Bedfordshire, is Nissan’s

management positions in Nissan’s global business

why this had to remain the case.”

centre of excellence for the design and

– a tribute to the efficiency of the firm’s UK

Since acquiring the disused RAF Usworth

development of vehicles manufactured across

operation. He returned to Sunderland to perform

base in Washington, Tyne & Wear, Nissan’s

its European plants, where highly skilled

the ground-breaking ceremony for the extensions

Sunderland plant has become a truly British

engineers and researchers transform vehicle

being built to accommodate Infiniti production.

success story. Production began in 1986 with the

concepts into production reality.

Development of the Infiniti Q30, which will be

Nissan Bluebird and – after more than £3.5 billion

Nissan now supports 39,000 UK jobs,

exported around the world, is being supported by

of investment – has risen from 5,000 to 500,000

including more than 11,000 at these three

the Nissan teams in London and Cranfield ahead

vehicles a year, eclipsing the output of any other

sites and in its UK dealerships, and more

of its sales launch later this year. When production

plant in British carmaking history.

than 27,000 in the UK supply chain.

begins, Infiniti will become the first new car brand

With European sales reaching record levels,

Nissan’s latest challenge is its luxury

to be manufactured in the UK on this scale in

Nissan has invested over £1 billion in the past four

Infiniti range. The Q30 will be Infiniti’s first

23 years.

years alone in its UK operations. Developments

global compact car, and the first Infiniti to be

“The existing Sunderland plant is already

have included a £200 million lithium-ion battery

made in Europe. Preparations began at the

the largest in UK automotive history,” says Mann.

plant and a completely refreshed model line-up

end of 2012, when the car was first announced

“This £250 million investment will move the plant

that includes the Qashqai, the Juke, the Note,

for Sunderland, and have involved two major

even further up the value chain and reconfirm

the all-electric LEAF and now the Infiniti.

extensions at the plant.

our commitment to its future.”

090

•

Nissan | business profile

“ The existing Sunderland plant is already the largest in UK automotive history�

091

CBI: 50 Years of Business Innovation | UK SPOTLIGHT

Perhaps the true mark of a successful company is that its core values stand the test of time.

Established in 1815, the pensions and life company Scottish Widows is currently commemorating its 200th anniversary. And, while things have

A policy of Doing the right thing

changed a little since those early days, it remains an organisation that prides itself on strength, reliability, integrity and innovation.

Founded as Scotland’s first mutual life office, Scottish Widows initially secured provisions for women during the Napoleonic War. Today its remit

Scottish Widows www.scottishwidows.co.uk

is broader, largely focusing on services for smalland medium-sized enterprises (SMEs). As Chief Executive Toby Strauss says, “Scottish Widows has protected its customers for 200 years. Building on that great history, we are now looking forward to securing the future of our customers for the next 200.”

It’s a moral company, too. “Our brand is based on trust,” says Peter Glancy, Head of Corporate Pensions, who has spent his entire 25-year career at Scottish Widows. “It’s important to us that we’re doing the right thing for the customer when we design, execute and deliver products.” That means offering simple and transparent products that everyone can understand. “We don’t have hidden charges or confusing clauses. If we’re helping customers, we feel motivated to work together and deliver good results.”

A common agenda This approach engenders a positive company culture. “It’s very collegiate and ethical here,” says Glancy. “Everybody’s supportive because we’re all working to a common agenda – and that common agenda is the same as the customer’s agenda.”

New recruits notice this, too. “When people come here from other pensions and life companies, they often comment on how customer-focused we are.”

This may go some way to explaining its popularity. As one of the largest pension providers in the UK, Scottish Widows has around 3 million pension customers. Of these, some 1.2 million are corporate pensions schemes – and the majority of those are SME customers. “We’ve got 40,000 schemes,” says Glancy, “and 95 per cent of those are targeted at the SME community.”

However, this is a community facing significant change at the moment – change that Scottish Widows believes it has a responsibility to guide

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Scottish Widows | business profile

“If we’re helping customers, we feel motivated to work together and deliver good results”

clients through; again, doing “the right thing”.

offer that support because SMEs are our market.

The incoming system of auto-enrolment, for

It is going to be tough and it is going to need a lot

example, imposes a legal obligation on employers

of investment – but it is the right thing to do.”

to set up a pension scheme that meets certain criteria by April 2018. It will impact on 1.3 million

Pension scheme know-how

employers, says Glancy – around 900,000 of whom

The company is therefore providing digestible

have previously had no pension scheme in place

information online and has invested in new

at all. “Employers have to do this correctly or they

technology to help employers with their auto

could face significant fines or, in extreme cases,

enrolment obligations. Scottish Widows is also

potential prison sentences,” says Glancy. “It’s just

developing a robust infrastructure to support

as serious as corporation tax and VAT returns,

SME employers with this new legislation,

but it’s much more complicated, so it’s quite a

including – what Glancy calls “putting boots

challenge for small businesses. They’re going

on the ground” – helping them to put the right

to need help. We have a moral obligation to

measures in place. This new pensions and auto »

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CBI: 50 Years of Business Innovation | UK SPOTLIGHT

094

Scottish Widows | business profile

enrolment advice programme for small and

for six months of the year and holiday for the

they take a pension scheme with us, and all their

medium-sized enterprises is particularly

other six months. From an employer’s perspective,

staff have access to it, for free. It’s a wealth of

important for Scottish Widows because

that could mean people working longer on a

information about personal financial planning

SMEs represent the company’s heartland.

more flexible basis. We need to help individuals

and so we are continuing to invest in developing

“The big employers were the first to put

plan their retirement, and encourage employers

mymoneyworks to ensure that it provides an

these new processes in place,” says Glancy,

to consider what their employees will be doing

unparalleled service to employees – especially

“We’ve been working with those big employers,

with these new freedoms and flexibilities.”

in the light of the new retirement freedoms.”

seeing what works well and what doesn’t work

And, again, Scottish Widows is embracing its

It shows Scottish Widows’ commitment

so well. It means that we can now take all

role to guide and educate. “In 2010 we launched

to innovation – something that the organisation

of that best practice and package it up into a

an award-winning online financial information

has, for the past 200 years, recognised as

simple and straightforward solution for SMEs.

and guidance service called mymoneyworks,”

not only good business, but also – simply

We’ve done all of that thinking for them, and

says Glancy. “We give that to employers when

but crucially – the right thing to do.

can now give them a template that’s good

•

value and compliant with the law.”

Individual guidance This innovative attitude and creative, problemsolving approach is typical of Scottish Widows.

But it isn’t just employers who are served by the company. It also considers the changes facing individuals. “The government’s recent Budget gives people much more freedom,” says Glancy.

“There used to be constraints on how much individuals could take out of their pension fund each year. This Budget says that, from the age of 55, people can do anything they like with their pension. I think people will use these new freedoms responsibly, using their pension pot as and when they need it, almost as a long-term savings account.”

This, he says, will help people plot a gradual journey into retirement. “They might move into a less stressful job, go part-time, or perhaps work

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CBI: 50 Years of Business Innovation | UK SPOTLIGHT

096

Siemens | business profile

Forging future-proof solutions Siemens www.siemens.co.uk

The global engineering and electronics giant

one energy source. We need to have an energy

them as well,” says Maier. “And we have Centres

Siemens has been based in the UK for more than

matrix, a mix of different power sources and,

of Competence in the UK to make those grid

170 years, and has always been a pioneer in its field. because the UK is an island, we also need to

connections happen.”

It was Siemens that laid the first telegraph

make sure that we have good interconnections

Siemens’ Renewable Energy Engineering

link between India and Europe in 1869 and installed

with neighbouring countries.”

Centre in Manchester houses the Global Centre of Competence for High Voltage Grid Connections,

the first electric street lighting (in Godalming in 1881). It was Siemens that produced the first

The Energy challenge

tasked with ensuring the efficient transmission

1MB memory chip for computers in 1988 and

The challenge of this energy matrix is to balance

of electricity from remote and offshore wind farms

pioneered Hawk-Eye technology for Wimbledon

resource efficiency, climate protection, reliable

with minimal power loss.

in 2000. “Innovation is, and has always been, our

supply and economic efficiency. “Siemens is

lifeblood,” says Juergen Maier, Chief Executive

one of the few players in the UK and in Europe

Innovative solutions

for Siemens UK.

that can offer more than just the generation

“We provide innovative solutions for production

Through efficiency and expertise, around

of power,” says Maier.

processes,” says Maier. “These include automation

14,000 Siemens employees deliver value to the

The world leader in offshore wind technology,

and drive technologies to help British industries

UK economy, helping UK businesses to be more

grid connections and service, Siemens technology

to perform better, to be more competitive in the

competitive, and providing innovative solutions

currently delivers more than 50 per cent of the

international market and to increase productivity.”

to rising challenges. Increasingly, it’s the supply

UK’s wind generating capacity. The company

Placing a greater emphasis on UK

of energy that has become the focus for Siemens.

established the world’s first offshore wind farm

manufacturing also provides an opportunity for

As the energy landscape becomes more complex

in Denmark in 1991; more recently, it provided

the economy to move away from an over-reliance

– through new sources of generation, new players,

175 turbines and the grid connection for the

on financial services, helping to rebalance

and differing needs and priorities in different parts

world’s largest offshore wind farm, London Array.

the economy.

of the world – a new perspective on the energy

Located in the Thames Estuary, London Array will

“What Siemens can do here is to really push

system is needed.

generate enough power to supply 500,000 homes

productivity issues and automation levels up a

“It is crucial to have a clear view of what

with clean electricity.

few steps in the UK, making UK businesses and

the energy market will look like and needs to

“It’s good to have wind farms in offshore or

industries more competitive on the international

look like,” says Maier. “We don’t favour any

remote environments, but you need to connect

scene,” says Maier. “If we start to invest in »

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CBI: 50 Years of Business Innovation | UK SPOTLIGHT

productivity and automation, as other countries

Siemens has recognised that engagement with

world’s largest exhibition centre for urban

have been doing over the last few years, we

the next generation of UK citizens is critical.

sustainability, The Crystal is designed not only to

will see a leap forward in British industry.”

“We need people engaging with technology to

engage younger people with the issues, but also

help cities like London and Manchester grow

to inspire the next generation of engineers, who

Moving INTO THE FUTURE

and prosper in the future,” says Maier.

will continue to refine, develop and build on the

As the population grows, the need for increased

The Crystal, in East London, represents a

innovations that Siemens is driving today.

road and rail capacity grows too, and Siemens

£30 million investment by Siemens to ensure that

It’s a new challenge, and one that the

plays a significant role in traffic management

younger people understand the challenges faced

pioneering company is tackling with characteristic

systems and UK rail services. Siemens’ cities

and the possible solutions for them. Housing the

insight and expertise.

and infrastructure divisions are some of the most innovative in the business, comprising rail systems, mobility and logistics, and low and medium voltage, smart grid and building technologies.

Siemens is supplying Thameslink with 1,140 energy-efficient Desiro City commuter rail carriages – for delivery between 2015 and 2018 – to dramatically increase the capacity of the rail network to move people across London.

Investing in rail also means investing in jobs, and the fleet will be maintained at new depots in Crawley and Harringay.

The rail sector will get a further boost with the inauguration of a new rail training academy in 2015 – a joint project between Siemens and the National Skills Academy for Railway Engineering – that will help address future skills shortages, forecast to be around 4,500 people over the next five years.

Meeting challenges Not only is the world’s population growing, it’s getting progressively older too, with more and more people striving to lead a healthy, highquality life far into old age. Siemens supports healthcare professionals by providing medical technologies that help deliver a better quality of healthcare and enable ever-improving degrees of individual care through advanced imaging, diagnostics, therapy and healthcare IT solutions.

Siemens Magnet Technology, based in Eynsham, Oxford, produces superconducting magnets for medical scanners used around the world. It has received seven Queen’s Awards in recognition of its hi-tech achievements and export success.

To meet the challenges of urbanisation, demographic change and climate change, by developing sustainable technologies for metropolitan centres and urban infrastructures,

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•

Siemens | business profile

“If we start to invest in productivity and automation, we will see a leap forward in British industry�

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CBI: 50 Years of Business Innovation | UK SPOTLIGHT

personalised banking relationships. In fact, in 2012, 2013 and 2014 the bank won the Investor Allstars award for best service provider.

“We were established by a group of entrepreneurs – largely out of frustration at the

Backing start-ups and global leaders alike

lack of attention other banks were giving to small businesses and start-ups,” says Gerald Brady, Head of UK Relationship Banking. “Our expertise makes a big difference. Most traditional highstreet banks have the ‘small business banker’ who, along with banking a technology business,

Silicon Valley Bank www.svb.com/uk

banks the hairdresser and the baker and the candlestick maker. But they don’t have a specialised understanding of how technology businesses grow.”

By contrast, SVB knows how to help innovative businesses grow from start-ups to corporate and publicly listed companies, and how to meet their banking needs at every stage of growth.

“Some of them are rocket ships,” says Brady.

Strong relationships

In today’s globally connected world, businesses

its inception in 1983. In that time, the bank

One of the bank’s earliest success stories was

must innovate and embrace technology. That’s as

has introduced new methods of lending while

Cisco – a business that designs, manufactures

true in their day-to-day business dealings as it

supporting up-and-coming businesses in three

and sells networking equipment. Having joined

is in their approach to banking – and it’s where

sectors: technology; life science and healthcare;

forces when Cisco was three years old, the

the expertise of Silicon Valley Bank (SVB) lie.

and energy and resource innovation. Today, it’s

business has been transformed from a fledgling,

Named after San Francisco’s technological

a thriving international operation with around

husband-and-wife operation into a multinational

hub, SVB has been a pioneering force since

14,000 clients and 1,800 staff that offers genuinely

corporation. Twenty eight years later, the two continue their strong relationship. This ability to create lasting connections and creative banking solutions for growing businesses is typical of SVB. Indeed, the bank has similarly solid histories with Twitter, which also joined as a start-up, and current US rising stars such as the peer-to-peer loans business Lending Club and transport app developer Uber.

SVB’s innovative lending model further sets it apart from competitors. “If you walk into a high-street bank looking for a business loan, they will ask about your revenues, how profitable you are, what assets you’ve got,” says Brady.

“They may also ask for a personal guarantee.

We’re dramatically different.”

At SVB, the approach is instead based on the premise that a lot of start-up businesses have no revenues and no assets other than intellectual property, though they’ll have usually raised some venture capital. “We look at the next round of venture capital they’re going to raise,” says Brady.

“It means we’re able to lend to businesses »

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Silicon Valley Bank | business profile

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CBI: 50 Years of Business Innovation | UK SPOTLIGHT

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Silicon Valley Bank | business profile

that most banks won’t help. It enables us to start working with businesses very early on in their life cycle and lend alongside their investors as a

“ A high-street bank will ask about your revenues, what assets you’ve got. We’re dramatically different”

partner. It’s a fundamentally different philosophy.” to everyone, and we don’t do the stuff that got

of people we know and trust, whether they are

Global reach

Wall Street in trouble. We put our money where

accounting firms, law firms or otherwise, and

Now available to clients worldwide, SVB has

our mouth is. At a time when many banks were

make introductions.” In May 2014, SVB UK did

operations in Israel, China, India and, since 2004,

retrenching, we were investing.”

this on a grand scale. Hosting a “pitch day”,

the UK. “We opened our first UK office 10 years

In a speech in 2010, David Cameron cited

the bank invited 80 corporates – including

ago,” says Brady. “Our European successes

SVB as helping “provide the finance that’s so

Dyson, Twinings, Virgin and Intel – to an event

since have included the international money

urgently needed” for the UK’s technology and life

in London to network with the bank’s start-ups.

transfer site TransferWise, the cloud innovation

sciences businesses. “We had a lot of cross-party

In addition to helping start-ups, SVB also

and content management company Huddle and

political support while the UK was struggling,”

works with growth and corporate businesses.

the communications business Skype.” Of the

recalls Brady. “All political parties now recognise

Making use of its vast expertise, SVB offers

six nominees for the 2014 Financial Times

the importance of entrepreneurship and

financing, treasury management and global

ArcelorMittal Boldness in Business Awards,

innovation to the UK economy, both in terms

banking solutions, and provides assistance

four of them bank with SVB.

of job creation and long-term wealth creation.”

through complex transactions and investments.

SVB’s knowledge in the technology sector also

The business has enjoyed this success

makes the bank an increasingly relevant partner

against the backdrop of a tough global economy.

Expertise and advice

However, SVB’s distinct way of working has

Doing things differently could be the company’s

in buyout situations. “We play the long game

distanced it from the recent troubles in the

mantra. “We’re trying to be the bridge for UK

and we’re here for the long term,” says Brady.

banking sector. In the last decade, the bank has

companies who want to build global technology

“My job title is Head of UK Relationship Banking

doubled its investment in the UK, and in 2012

businesses,” Brady says. The bank achieves

because that’s exactly what we’re trying to build.”

it opened a branch in London. “We’ve stuck

this by, for example, introducing its clients to

With its mix of personal approach and

to what we know,” says Brady. “We haven’t got

customers, investors and peers in other parts

sector expertise, SVB is developing global

into investment banking, we don’t do stock

of the world. “Over the years, we’ve worked with

connections that give start-ups the best start

trading, we don’t do bonds, we don’t do retail

hundreds, if not thousands, of CFOs,” he adds,

possible, while being the trusted bank of

banking – we’re not trying to be everything

“so we can point young businesses in the direction

mid- and late-stage businesses.

•

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CBI: 50 Years of Business Innovation | UK SPOTLIGHT

“Our trading teams and analysts are monitoring the markets every minute of every day”

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Wholesale Power UK | business profile

marketplace,” says Richard Butcher, Chief Executive of Stobart Energy & Infrastructure division. “Over the past 13 years, its expertise and proactive approach have helped us to reduce costs, obtain refunds and simplify

Proving that knowledge is power

our administrative procedures.”

As well as maintaining energy and carbon records for a company’s entire portfolio, WPUK produces individual site reports to track the success of energy management initiatives.

To date, WPUK have helped save Eddie

Wholesale Power UK www.wholesalepower.co.uk

Stobart £2 million through flexible purchasing alone – not to mention a further £1 million since 2011 through energy surveys, surface water drainage initiatives and wind turbine feasibility studies and proposals. Today, Eddie Stobart is an industry super brand, and WPUK has supported it at every stage of its development.

COMBINED savings By combining procurement and efficiency savings, WPUK’s average wholesale portfolio prices have out-performed standard retail approaches by more than 15 per cent for

Energy is an increasingly significant concern for

data on a business’s energy use, and conducting

the past eight years. “These are substantial

British businesses. Not only is it a substantial and

on-site audits, WPUK can determine current

savings,” says McNeilly, “especially for clients

rising cost, but it’s also a complex legislative area

efficiency levels and suggest where savings can

who are spending millions of pounds on energy.

that imposes carbon-management requirements.

be made.

Energy is a big expenditure, and if you don’t

To remain competitive, businesses must manage

Levies and pass-through charges have no

apply a risk-management strategy, you risk

energy costs – both in terms of spend and usage.

premiums attached and supplier fees are also

being overly exposed when something sudden

As energy-procurement specialists, analysts

minimised, because WPUK offers suppliers

happens in the market.”

and engineers, Wholesale Power UK (WPUK)

long-term business, with no sales or renewal

Perhaps the biggest benefit is having

has helped larger businesses manage their

costs. And, while businesses with larger energy

someone manage the entire process,

energy use and save on costs for 25 years, with

spends will have a bespoke energy solution,

including the ever-changing landscape of

the introduction of wholesale flexible energy

all services are also accessible to smaller

carbon-management legislation. WPUK’s

trading in 2006 expanding the range of services

companies via portfolio management.

integrated energy solutions mean that British businesses such as Eddie Stobart can spend

offered. WPUK’s traders spend time identifying opportunities and monitoring market drivers, such

Energy solutions

less time managing their energy requirements

as tracking weather forecasts and anticipating

When Eddie Stobart first engaged WPUK in

and more on building their core business.

geopolitical patterns, before purchasing energy.

2001 it was a small but growing transport and

“Our trading teams and analysts are

logistics company with six UK sites. As the

monitoring the markets every minute of every

business expanded to include ambient and

day,” says Commercial Director Keith McNeilly.

chilled warehousing, airport warehousing, dock

“This means we can draw upon a full year of

facilities and biomass storage, WPUK sought

opportunities to build up blocks of energy and

procurement solutions to fit the requirements

give our clients the benefit of market dips and

of an increasingly diverse portfolio.

lows, and avoid peaks.”

“With the volatility of costs in the energy

However, it’s not just the cost of procurement

markets over the past few years, the services

that a business needs to worry about – there’s

of Wholesale Power UK have proved invaluable

also improving energy efficiency. By managing

in securing the best deals available in the

•

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CBI: 50 Years of Business Innovation | UK SPOTLIGHT

There was once a time when there were more than 3,000 farmhouse cheesemakers in the West Country, but now Wyke Farms is one of fewer than ten that remain. Today it is Britain’s largest independent cheesemaker, selling more

The well-matured approach to fresh ideas

than 14,000 tonnes of cheddar per year in the UK alone, and to over 150 countries around the globe.

“Our family has been making cheddar on our farm in Somerset since 1861,” says Rich Clothier, Managing Director and third generation family

WYKE FARMS www.wykefarms.com

member of Wyke Farms. “We are proud of our heritage and tradition and the fact that it still influences new recipe development today.”

This success is down to its commitment to produce quality cheddar where flavour, texture and taste are paramount. It is about integrating its rich heritage of family values and tradition, including a 150-year-old recipe. And it’s also about Wyke Farms’ commitment to the environment.

A GREEN PIONEER Wyke Farms has recently made a name for itself as a green pioneer, with 14 national and international awards and accolades under its belt in the last year alone.

“We believe in working in synergy with our surroundings and in operating our business in a way that has minimal impact on the Somerset environment,” says Clothier. “We have created an integrated, long-term sustainability plan, which we call Wyke Farms 100% Green.”

At the hub of Wyke Farms’ ongoing green initiative is an on-site biogas plant, a £4 million investment that has transformed the business.

The impressive anaerobic digester, which took five years to plan and construct, converts 75,000 tonnes of biodegradable waste materials from the farm and dairy per year into energy.

“That energy is used to power the dairy and cheesemaking process,” says Clothier. “It saves more than 5 million kilos of carbon dioxide per annum and renders Wyke Farms 100 per cent sustainable in green energy. This initiative is also backed up by changes in work practices, like reusing our wastewater, installing solar panelling, making use of electric delivery vehicles and reducing our packaging waste.”

Wyke Farms’ achievements in this field have not gone unnoticed by government.

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WYKE FARMS | business profile

“We are proud of our heritage and tradition and the fact that it still influences new recipe development today”

“Wyke’s new cutting-edge water-recovery

Europe, Africa, the Far East, the Middle East

system will help save thousands of litres of

and North America. Its biggest export market

water a day,” says Energy and Climate Change

is France, where Wyke holds the position as

Minister Baroness Verma. Even the Prime

brand leader – an impressive achievement in

Minister is full of praise. “It is great to see a

a country that has over a thousand different

family farming business like Wyke investing

types of cheese.

in such an innovative green energy scheme,”

Indeed, Wyke Farms is an inspiring example

says David Cameron. “Making use of their

to British industry. It’s one of the few family-run

waste products in order to become 100 per

national food brands with a genuine provenance

cent self-sufficient in green energy will make

story, traditional family values and commitment

them more efficient and help the environment.”

to sustainability. With no plans to rest on its laurels, it is already at work on the second

Cheddar champion

phase of its biogas project, which will generate

The cheesemaker has become an international

more green energy to power its operations and

success, with its products being bought across

to export back to the grid.

•

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Business profile | Punjab National Bank (international) Ltd

profitable since its inception. Today, the bank has 50,000 UK customers and four branches in Greater London, as well as branches in

A simple service with the personal touch

Leicester, Birmingham and Wolverhampton.

The bank’s asset size is currently $1.8 billion.

“We have a simple operating system and a back office in India, so whatever costs we are able to reduce in our operations, we pass on to our customers by paying higher interest,” says

Punjab National Bank (international) Ltd www.pnbint.com

Singh. “In this way, our rates are higher than other high-street banks, but comparable with other Indian banks.”

AN INDIAN Institution In 2015, Punjab National Bank (PNB), PNBIL’s Indian parent, celebrates its 120th anniversary.

Now headquartered in New Delhi and one of India’s “big four” banks, PNB has more than

As the finance industry comes to be viewed

(International) Ltd, or PNBIL. “We deal with

6,000 branches and 80 million customers

as increasingly complex, many customers are

current accounts, savings accounts and term

globally – in India, the UAE, Hong Kong and

attracted to simpler services and solutions.

deposits – but with a personal touch.”

Afghanistan, and representative offices around

“We believe in simple banking products –

A wholly owned subsidiary of PNB India,

the world. It also has tie-ups with banks in Nepal

plain vanilla banking,” says Bhupinder Singh,

PNBIL commenced its UK operations in

and Kazakhstan. A retail and wholesale bank,

Managing Director of Punjab National Bank

May 2007 with two branches and has been

PNB’s total business is around $120 billion with customer deposits of $68 billion.

Around 95 per cent of PNBIL’s customers are based within the UK’s Indian community, but the bank is attracting an increasing number of non-Indian customers, particularly with its cash ISA and its contactless debit cards. PNBIL’s rupee remittance facility has been widely embraced by the country’s Indian community because of its competitive exchange rates and highly efficient remittance facilities, along with its access to PNB’s huge network of branches across India.

“We do not have a bonus culture or incentives for sale of products, and executive salaries are modest,” says Muddoor Nayak, PNBIL’s Executive Director. “That’s another reason why we’re able to keep our costs down and pass on the benefits to our customers, and it’s a value that’s shared by our parent bank.”

Recognising that its progress is dependent on the progress of its customers, PNBIL has embraced a view of financial services that is low-cost, consumer-friendly and personal.

•

Indeed, banking made simple.

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