Busines s voice | the CBI magazine
Keeping the faith Sir Mike Rake, CBI president and defender of UK business
September/ October 2013
B u s i n e s s vo i c e | t h e C B I m ag a z i n e
September/October 2013
14.interview:
Sir Mike Rake The new CBI president and chairman of BT, tells Pip Brooking why it’s time for the public to trust business again.
8.infographic:
infrastructure The latest CBI/KPMG infrastructure survey reveals real concerns about the current situation – and little faith that government policies will lead to improvements.
Regulars 04 Cridland’s Notebook: The parties now have a much greater distinction between their positions. The CBI needs to communicate the implications of their plans.
20.ENERGY MIX How do the leading companies in shale gas, nuclear, offshore wind and tidal power propose to help secure the UK’s future energy supply? And what support do they require to do so?
26.building britain:
Mersey Gateway The £600m Mersey Gateway project recently attracted a government guarantee. The new toll bridge over the Mersey aims to kick-start regeneration around Widnes and Runcorn.
28 International: Global taxation rules need modernisation, but this should not come at the expense of UK competitiveness.
36 Member News: Charting business growth across the UK. In this issue: Polaris Media, McErlain’s Bakery, Redwood Technologies, Mark Group, Titania & Sumerian.
36 Member Clinic: Ben Bengougam, vice-president, human resources EMEA at Hilton 10.EVENT FOCUS:
30.Member profile:
INDUSTRIAL STRATEGY
add-victor
A year after the government launched
elite athletes and armed forces
its industrial strategy, a conference
personnel aims to ease the transition to
hosted by BIS and the CBI focused on
civilian work, explains director Steve
progress – and the work that remains
White-Cooper.
The recruitment specialist for former
to be done.
6.guest columnist:
George PARKER This year’s conference season marked the start of a much more fierce political battle – one which has business at its heart.
Worldwide, reveals the process behind setting up the hotel chain’s successful Apprentice Academy.
40 CBI Diary: Upcoming events and photo gallery. In this issue: contenders for the Growing Business Awards are revealed.
“It’s important to keep positive news in perspective: we’re still only part of the way through the slowest recovery on record”
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Busines s voice | September/october 2013
Cridland’s notebook: Growth politics
Growth politics First we had a summer of economic revival, then we had the animated party conferences. Now the starting gun for the race to elections in May 2015 has been fired, business must remain the voice of growth and job creation. Good news travels fast The most significant news over the
While the private sector leads our
capital expenditure; and raising
last few months has undoubtedly
recovery, it’s essential government
living standards.
been the broad-based expansion
plays a role in improving the
in the economy. The latest CBI
underlying business environment.
had already been claimed by Ed
surveys show a rise in business
Working hand in hand remains key.
Miliband. In his conference address,
optimism across services, finance,
And as the recovery gathers pace,
But the cost of living debate
he set out a vision which is a
construction and manufacturing.
attention will inevitably shift toward
setback for Labour’s pro-enterprise
And as I travel around the country,
whether the benefits of growth
stance. It seems incongruous, in
I’ve been hearing more and more
are being evenly distributed, and
my opinion, to back small business
regularly from firms already ramping
what effect this is having on living
while squaring up to big business.
up production to meet demand. It’s
standards. The party conference
Reducing business rates is a good
good news. This renewed confidence
season gave us an insight into
thing, but it shouldn’t be funded
will, I’m convinced, continue to drive
the main parties’ pitches to the
by increasing corporation tax.
our return to growth and, as a result,
electorate on these issues – and
Placed alongside other policies on
the CBI has increased our growth
we’re now seeing the development
energy and compulsory purchase
forecast for next year up from +2%
of distinctive political narratives.
orders, Labour’s challenge was a
to +2.3 per cent. But it’s important to keep this
Labour’s challenge
considerable one. But the CBI’s political neutrality is
positive news in perspective: we’re
The Liberal Democrats have again
the cornerstone of our credibility. So
still only part of the way through
positioned themselves as a natural
we’ll continue to work closely and
the slowest recovery on record.
moderating influence on a possible
constructively with all the political
Unemployment remains high, living
post-2015 Conservative- or Labour-
parties to help demonstrate that every
costs are rising, and our overall
led coalition. In their speeches,
business, large or small, leads the way
productivity is 15 per cent lower
both the prime minister and the
to job growth and wealth creation.
than it was pre-crisis. So before we
chancellor offered strong messages
By extension, therefore, business is
can call it a sustainable recovery, we
about how vital business is to the
making a positive and responsible
need to see a full-blown economic
UK’s collective future prosperity;
contribution to society. Our voice
rebalancing with much stronger
about running a surplus once the
in the evolving debate on living
business investment and trade.
deficit is eliminated; increasing
standards will be an important one.
Busines s voice | September/october 2013
5
Is profit a dirty word? Whether it likes it or not, business has found itself at the centre of a political battle. This was a party conference season to remember.
Words: George Parker, political editor, Financial Times
Sometimes the party conference
Miliband leads a party that is ahead
might not amount to a fundamental
season lingers in the memory
in the polls and which, according
reshaping of the market economy,
for about as long as it takes the
to some analysis, can win the next
but they are a signal of intent about
cleaners to clear the press room
election with a 35 per cent share
the role of the state in intervening
of the polystyrene cups, half-eaten
of the vote. His assured speech
in supposedly failing markets and
sandwiches and discarded copies of
to his conference in Brighton was
a shift of support from big to small
ministerial speeches.
a reminder that he is not to be
companies.
Not this year. Ed Miliband’s speech to the Labour conference – a “business bashing”, paean to Marx according to the Tories – has electrified politics and broken the consensus of the last 20 years or more that politicians need to court corporate Britain to win elections. Miliband’s speech defined the conference season and David Cameron’s closing address to the Tories was in large part a reaction to it: an avowal of his belief that “profit is not a dirty word” and that the path to an economic recovery benefiting all is through enterprise. Strip away the overheated rhetoric of the last few weeks, and business will want an answer to one simple question: are the politicians – and Miliband in particular – going to make life harder for entrepreneurs over the coming years? The first thing to say is that 6
Busines s voice | September/october 2013
underestimated: his position as leader is secure.
A gamble worth taking The significance to business of Miliband’s speech was that for the first time he was turning into hard policy his somewhat wonky notion of “responsible capitalism” and his conviction that something has “broken” in the transmission mechanism from growth to rising living standards. So we had the promise to reverse a planned cut in corporation tax for big business to pay for an across-the-board business rate cut;
Privately Ed Balls, shadow chancellor, and Chuka Umunna, shadow business secretary, warned of the risk this would pose to the party’s pro-enterprise credentials, but Miliband decided to gamble. “We threw the dice,” said one aide. Miliband is glad that he did. The policies have tested well in focus groups and the Labour leader believes he can now present himself as being on the side of insurgent small businesses against the mighty corporations which he knows will never support Labour at the next election.
threatened seizures of land from
Fighting fire with fire
property-hoarding developers; a
The Tories were initially wrong-
requirement on big companies to
footed by the proposed energy price
take on “local” apprentices to match
freeze, but by the time they arrived
non-EU hires and, of course, energy
in Manchester they were convinced
price controls.
that Miliband had made a strategic
Miliband’s policy prescriptions
mistake. Whatever the nuances of
guest column: George Parker
“Miliband’s speech defined the conference season and David Cameron’s closing address to the Tories was in large part a reaction to it”
the Labour leader’s position, George
signalling austerity running through
Osborne and David Cameron will
until 2020 as he seeks to build up
relentlessly present it as being
a budget surplus by the end of the
anti-business.
next parliament.
Osborne called Miliband a
Osborne’s gloomy prognosis is
pessimist. “For him the global
intended to force Labour to answer
free market equates to a race to
questions about its own fiscal rigour:
the bottom with the gains being
would Miliband match his plan to
shared among a smaller and smaller
run a surplus “for a rainy day” and –
group of people,” he said. “That is
if so – how would he deliver it?
essentially the argument Karl Marx made in Das Kapital.” The big question is whether
The prize being offered by Osborne at the end of all that pain is the prospect of tax cuts to individuals
Miliband’s speech marks the start
and businesses. Labour might move
of a broader Labour attack on
slower on deficit reduction but may
“predatory” capitalism – for which
win plaudits from business people if
read banks, energy companies,
it promises to outspend the Tories on
rail companies and big business
infrastructure.
generally – or the high point. Umunna privately suggests
It is shaping up to be a fascinating political battle. And one thing is
it is the latter. He does not see
certain after this conference season,
any immediate need for further
business will be at the heart of it:
interventions in the market. Both
whether it likes it or not.
he and Miliband will, in the coming weeks, go out of their way to stress they are “pro-business”, or at least pro-small business. Aside from Miliband’s speech, the other truly significant event of the conference speech was Osborne’s “it’s not over” Tory address, Busines s voice | September/october 2013
7
Only connect?
Digital bright spo
According to the World Economic Forum’s competitiveness index, the UK is ranked just 28th for the quality of its infrastructure. And the latest CBI/KPMG infrastructure survey shows that businesses have real concerns – especially as only a third of respondents believe current government policies are enough to improve the situation over the next five years.
Companies were asked to name their top considerations when choosing where to invest:
85%
believe that the UK’s fixed-l broadband matches or exce what’s available in other countries…
98% of firms say the quality and cost of infrastructure has a significant impact on deciding when and where to invest.
8
85%
80%
77%
Transport
Digital networks
Cost of energy
Busines s voice | September/october 2013
…although th and 63 pe
infographic: UK Infrastructure
ot: Trade barriers:
83% of businesses say they’ve seen an improvement in the UK’s digital networks in the past five years.
line eeds r
hat falls to 65 per cent for super-fast er cent for mobile broadband.
85%
of big multinationals say international links with emerging markets are very important…
…yet only 47 per cent of all companies are satisfied with their availability, down from 60 per cent in 2011.
28%
expect improvement in international air links over the next five years, compared with 31 per cent who expect to see things get worse.
Transport trials: Dissatisfaction with domestic transport links is rising.
49%
Roads are the biggest concern:
73%
aren’t happy, compared with
28% in 2011
40% have seen improvements to intercity rail services – up on 2011 figures.
have seen a deterioration in local roads in the past five years.
62% have seen improvements to tube and metro services.
46% have seen motorways getting worse.
But only 28%
say they expect to see improvements to the UK’s transport infrastructure in the next five years.
Busines s voice | September/october 2013
9
Playing the long game Speakers including Vince Cable, John Cridland and Sir Richard Lambert told a recent BIS/CBI conference that real progress had been made on industrial strategy – but warned against resting on our laurels. Peter Curtis reports
10
Busines s voice | September/october 2013
Event Focus: Industrial Strategy
Busines s voice | September/october 2013
11
“The kind of growth we want isn’t going to emerge of its own volition,” said business secretary Vincent Cable at last month’s industrial strategy conference, jointly hosted by the Department for Business, Innovation and Skills (BIS) and the CBI. Twelve months after the government launched its industrial strategy, more than 200 senior delegates from industry and government gathered at the University of Warwick to discuss progress, share best practice and develop action points for the future. And although significant steps have been taken, they concluded that there’s much more work to be done to achieve the fundamental economic rebalancing needed to secure long-term UK growth. In his keynote speech, Cable said that the three overarching principles of the industrial strategy were now being applied: long-term, strategic action from government; partnerships between business and government to tackle classic market failures in areas such as skills and innovation; and a joined-up approach across government. While acknowledging that “there was no silver bullet”, Cable praised businesses and workers for the progress made so far. He also outlined a range of government initiatives to support some of the industrial strategy’s 11 priority sectors, including a £1.6bn industrymatched package for long-term R&D in aerospace, automotive and
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Busines s voice | September/october 2013
agri-tech; extended protection for the science budget; and Employer Ownership Pilots, where companies are funded to design and implement vocational training programmes for their businesses. But he argued that the period up to and including the financial crash had wrought serious structural damage in some parts of the economy – including a loss of skills and a hollowing-out of supply chains – and warned that we must not rest on our laurels. “We shouldn’t let up because of a few quarters of good economic data,” he said. The real test of the industrial strategy would be for it to have sufficient support across the political parties and in business to be “election-proof”, he added. “I am optimistic that that will happen.”
New ambition CBI director-general John Cridland said that gathering economic momentum should provide the basis for a new level of ambition. He outlined the findings of a new CBI report on industrial strategy, Raising the bar, which found that nearly two-thirds of businesses weren’t clear what the industrial strategy was trying to achieve. So he called for action in three areas: further improvements to the competitiveness of the UK’s business environment; strengthening supply chains in key growth sectors; and setting challenging objectives on implementation. He welcomed the reduction in
“We shouldn’t let up because of a few quarters of good economic data” Vince Cable
Event Focus: Industrial Strategy
UK corporation tax and increased export support through UK Trade & Investment, but warned that infrastructure problems were one of the factors behind the UK’s fall from eighth to tenth in the World Economic Forum’s recent global competitiveness rankings. “If the industrial strategy really delivers, we won’t be at tenth in five years’ time – we’ll be in the top five.” Cridland also pledged to “keep politicians’ toes to the fire” on delivery. “Henry Ford once said that ‘vision without execution is hallucination’. I don’t want to look back in five years’ time and see industrial strategy as another hallucination.”
Grounds for optimism Delegates also heard from speakers representing two specific sectors. Joanna Shields, chief executive of the Tech City Investment Organisation, discussed her work with BIS on industrial strategy to nurture growth in the UK’s 13
successful tech clusters, including Tech City in London. “I’ve never been more optimistic about where things stand in this country,” she said. “It’s such a hotbed for talent.” She also discussed an initiative to help high-growth companies list on the London Stock Exchange. “Five years from now we hope that they will see London as a place to list and grow,” she said. Professor Richard Parry-Jones, co-chair of the Automotive Council, explained how the automotive industry had formed a strong partnership with government to develop a strategy to reverse 30 years of decline. “Who would have thought six years ago that we would be sitting here talking about the UK automotive sector being a success story?” he said. The government’s most important role was not the provision of financial support but putting out attractive messages to inward investors, he argued. “We like your money, but we like your rhetoric even better.”
“I’ve never been more optimistic about where things stand in this country. It’s such a hotbed for talent” Joanna Shields
Sir Richard Lambert, chancellor of the University of Warwick and former director-general of the CBI, discussed the work of the new Industrial Strategy Council, which he co-chairs with Cable. Made up of the chairs of each of the 11 sectors, the leaders of the CBI and the TUC, and company representatives, it was established to share best practice across sectors and maintain progress. “Industrial strategy is about government and business working together in a two-way partnership,” he said. “It’s about action, as well as vision.”
Progress made… but more to do
51%
of businesses are confident that UK business conditions will improve in the next five years.
60%
are still unclear about what the industrial strategy is meant to achieve.
63%
think government funding and policy doesn’t strategically support the UK’s competitive advantages.
Source: Raising the bar, CBI Busines s voice | September/october 2013
13
Offshore wind BIS published its industrial strategy for offshore wind in August. And according to Adam Bruce, global head of corporate affairs at solar and wind energy developer Mainstream Renewable Power, it is a sign that the government has changed its thinking about the sector.
“Up to now offshore wind has been seen just as energy policy – whether it was keeping the lights on...” Adam Bruce, Mainstream Renewable Power
“Up to now offshore wind has been seen just as energy policy – whether it was keeping the lights
government risks deterring potential inward investors
on or reducing greenhouse emissions, it was [the
and partners. “You have the industrial strategy from
responsibility of] the Department of Energy and Climate
BIS and very supportive words from the prime minister
Change,” he says. “Now both the prime minister and the
when he opened the London Array wind farm. But
deputy prime minister have identified, absolutely rightly,
then you get a suite of documentation from DECC that
that this is a massive industrial opportunity for the UK.”
says ‘we could do this in an alternative way which
Bruce also chairs the Offshore Wind Programme
would mean not very much offshore wind’. That is not
Board, which brings together representatives from the
a constructive way of delivering the kind of investment
industry, the UK and Scottish governments and other
that we want to see.”
relevant bodies. He argues that the UK industry is well
Greater certainty would help to increase volumes and
placed to benefit from this opportunity over the next
reduce the costs of offshore wind – one of the principal
15 years. But he warns that a lack of consistency from
challenges facing the industry, Bruce adds.
Digital industries The government’s investment in super-fast broadband infrastructure is a welcome boost to the UK’s digital industries. But teaching coding skills in schools is a critical part of industrial strategy for the sector, says Ian Livingstone, life-president of games company Eidos and vice-chairman of the Association for UK Interactive Entertainment. Livingstone – who also co-founded producer and
“In the 1980s we introduced coding in schools, but somehow it was left to wither and die.” Ian Livingstone, UKIE computational thinking and problem-based learning. Kids can learn how to write their own algorithms and
retailer Games Workshop – was the co-author of the 2011
manipulate other people’s software language – and
Next gen review, which played a key role in convincing
perhaps write their own.”
education secretary Michael Gove to replace the ICT
But Livingstone believes that more could be done,
curriculum with a computing curriculum from 2014. “The
including giving each child in the country a Raspberry
past 30 years have been a complete wasted opportunity,”
Pi (a cheap, credit-card-sized, programmable computer)
he argues. “In the 1980s we introduced coding in
and improving teacher training. And he warns that the
schools, but somehow it was left to wither and die.”
arts and humanities shouldn’t be neglected in the push
The new curriculum will help young people to become
to promote the STEM (science, technology, engineering
“digital makers” as well as “digital users”, he says.
and maths) agenda. “STEM is vital – and computer
“It’s still essential for everybody to understand how
science is part of that. But we still need to create an
to use technology – but you then build on that with
environment in which creativity flourishes.”
14
Busines s voice | September/october 2013
Event Focus: Industrial Strategy
Construction For Andrew Wyllie, chief executive of construction and engineering group Costain, an industrial strategy is an essential component if the UK is to meet some fundamental needs over the next 20-30 years – from rebalancing the economy and regional development to
“...training and the STEM subjects, as well as taking on apprentices, are very important.” Andrew Wyllie, Costain
generating job opportunities for young people. “For the first time in a generation we’ve had a real
to tap into new technologies and processes as it seeks
plan about how to develop a 21st century infrastructure,”
to respond to the changing needs of customers. “The
he says. “The fact that there appears to be a cross-party
government has provided forums and funding and set
commitment to put that in place – whether it’s energy,
up the Technology Strategy Board – but this has got to
broadband or transport – has to be encouraging. And
be driven by business,” he says.
we’re seeing billions of pounds being invested in real projects today to help achieve those targets.” Wyllie, a member of the CBI Construction Council, believes that the construction industry must do more
The right skills will also be a key ingredient in meeting those changing needs, he says. “That’s why training and the STEM subjects, as well as taking on apprentices, are very important.”
Automotive The partnership between government and the UK’s automotive industry is one of the most successful examples of industrial strategy in action, with businesses in the sector playing a key role in shaping the direction of policy through the Automotive Council. Martin Fausset, managing director of technology
“There’s a significant cost if you try to reinvent the wheel each time, so we’re trying to find smarter ways of doing it.” Martin Fausset, Ricardo UK
and engineering consultancy Ricardo UK, believes
that if you try to reinvent the wheel each time, so we’re
that the strategy’s success is underlined by the strong
trying to find smarter ways of doing it,” Fausset explains.
performance of the sector, particularly in exports and the
More broadly, he’s concerned about the complexity
development of new models and technologies. “It has
of the range of financial support and advice on offer
set a context that enables people to make investment
from various government agencies. “Our competitors
decisions,” he says.
are able to access one-stop-shop arrangements in some
Ricardo itself was awarded funding under round two
countries in Europe and the Far East,” he says. And
of the government’s Advanced Manufacturing Supply
he suggests that further work is needed across British
Chain Initiative as part of a consortium of companies
industry to turn invention into innovation. “The UK
(including Jaguar Land Rover) and universities
has always been extremely good at inventing things
developing safety-critical software, which is increasingly
but less good at bringing them to market. We’ve got an
being deployed in vehicles. “There’s a significant cost to
opportunity to look at that.”
Busines s voice | September/october 2013
15
BIG interview: Sir Mike Rake
Time for
a truce?
Sir Mike Rake, accountant, chairman and now CBI president, wants the public to trust business again – banks included.
Words: Pip Brooking Photography: Peter Searle
16
Busines s voice | September/october 2013
Busines s voice | September/october 2013
17
S
ir Mike Rake,
career working with multinational
regulation – it’s not just the British
chairman of BT
clients, he views the outcome
complaining,” he explains. “The
and the CBI’s new
of both as critical for the UK’s
referendum will hopefully help
president, is known for
position in the world. “The UK’s
drive a mood across the EU for
his straight talking. But after eight
competitiveness has never faced
business organisations to agree on
uninterrupted minutes of it, it’s
more challenges,” he explains,
labour flexibility, competitiveness,
clear he thinks the UK faces a huge
pointing to the US, where energy
energy and so on.”
number of issues over the next two
prices are “at half our level”, and
years, in which the CBI has a role
developing markets, “which can
realise that when they take issue
to play.
work at cost levels we can’t”.
with regulation from Brussels, the
In quick succession he covers
But Rake is adamant that it is the
But he is keen that more people
problem is largely with gold-plating
referendums (both Scottish and
CBI’s role to present the facts and
that happens at a UK government
European), international trade
opinion of its membership, and ask
level. He warns about the impact
and competitiveness, energy,
the important questions on their
uncertainty will have on investment.
infrastructure and skills. He talks
behalf, rather than campaign for
And he emphasises the importance
about the importance of facts not
one outcome or another. “There’s
of eastern European immigration to
emotion, of politically inconvenient
been more emotion than fact in this
businesses in the UK.
truths, of uncertainties that are
debate and we need to deal with
hurting and decisions that need to
this,” he says of discussions around
have the skills available or the
be made.
the EU.
attitude to work that allows SMEs
It is the referendums that are likely to dominate Rake’s presidency. The Scottish referendum took top billing in media reports of his first official speech as president at the CBI Scotland annual dinner in September. Debate on the EU will also define the run-up to the UK elections, likely to take place in May 2015. But that preoccupation does not bother him. “It’s exactly why I think it’s an important time to be president,” he argues. And with an international mindset, forged from spending 17 years overseas at KPMG and a
18
Busines s voice | September/october 2013
European flavour Rake himself is definitely in the pro-European camp. He’s a member of Business for New Europe for
“Rightly or wrongly, we do not
across the country to get access to the people they need. This may be politically inconvenient but it’s the truth,” he says.
starters. And as a board member
Business priorities
of the Trans-Atlantic Business
And this is an area that Rake,
Council he sees the current trade
although modest, is well qualified
talks between the EU and the US as
to talk about. He was the first
“absolutely critical” and a sign of
chairman of the UK Commission
the union’s strength.
for Employment and Skills, where
He also sees some benefit
he recognised that “we’ve sent far
coming from the discussions
too many people to university, in
around membership. “There is now
the wrong subject. We haven’t had
recognition across Europe that we
enough apprentices and we haven’t
need to move towards the reform
had enough focus on practical
of the EU, the completion of the
skills.” He adds: “This is beginning
single market and reduction of
to be understood more clearly.”
Interview: Sir Mike Rake
The skills issue has been high on the list of concerns among every CBI member he has met so far, as have energy prices and the security
“Fibre broadband across the UK is the only really successful infrastructure project being privately funded over the past several years”
of supply. Such unanimity reflects Rake’s worry that the UK has been too slow to make decisions “on a
For better or worse But the timing of the interview,
whole series of really important
three days before the fifth
policy matters”.
anniversary of the collapse of
And from his vantage point
Lehman Brothers, gives Rake a
as chairman of BT and former
platform to show how he is keen
chairman of Easyjet, he
to argue on businesses’ behalf
emphasises the importance of
through thick and thin. He is also
infrastructure in ensuring we have
deputy chairman at Barclays and
a sustainable recovery.
was at the bank “that day – on a
He has a “just get on with it” attitude towards Heathrow’s new
Sunday – when it all went down”. But he’s worried the pendulum is
runway. “I think it is fundamentally
swinging too far when it comes to
important to jobs and prosperity,”
the reaction, reform and regulation
he argues. And although he is less
that has happened since. Although
clear cut on HS2, saying he “is
he thinks greater clarity is emerging
not expert enough to know where
around the new regulatory
priorities should be”, he adds:
environment, and he is hopeful
“We’ve underinvested in railways
for the new Bank of England
and roads, that’s for sure.”
regime under Mark Carney, he
Then, with a logic that is difficult
argues that the “discontinuity of
to argue with, he states that BT’s
approach to capital and liquidity”
roll-out of fibre broadband across
in Washington, Brussels, Frankfurt
the UK “is the only really successful
and London is harmful.
infrastructure project being
“Frankly, whatever the sins of the
privately funded over the past
banking community – and there are
several years”.
many – these were at least equalled
It proves that private investment
by regulatory failures, accounting
is possible, he continues, but
failures, reporting failures,
in order for that to happen
behavioural failures: there are a lot
government has to make choices
of people to blame for this,” he says.
and reduce the uncertainties that are hurting businesses.
In 2006 he gave a speech while he was still at KPMG
raising his concerns about the complexities of products in investment banking, which could be easily misunderstood. Perhaps unsurprisingly given his no-nonsense approach, he is pleased to see the return of “vanilla products” on that front. “If you buy a chocolate bar from Tesco you pay 75p, you eat it and you either like it or you don’t; if you buy an investment product, it can go up or down in value – that’s just a fact,” he says. He adds that it is just as important to avoid complexity for consumer products, noting that PPI and other mis-selling losses have cost more in some banks than investment banking activities. But he believes that the way that has been handled by the banks, the regulators and the courts has made it far more costly and damaging than it ever should have been. On the issue of lending, he says: “Business is about taking risks, and after a crisis like that the truth is that your regulators and your banks all become risk averse. It’s a double whammy.” And referring to more recent events, he says: “Libor was a Busines s voice | September/october 2013
19
minority – things were got badly wrong – but at some point we’ve got to settle down and recognise that banks are important to the UK.” Nevertheless, he thinks it will take at least a decade to restore the reputation of the banks in the UK. “Fair or unfair, that’s the reality,” he says.
Championing a cause And if, after his two-year stint, Rake is remembered for championing one thing, he wants it to be the return of trust in business as a whole. As the former chairman of Business in the Community says, “it’s not just banking that isn’t trusted”. He continues: “I want businesses to be seen as source of jobs and investment; as socially conscious and a force for good.” He reels off a long list of distrusted organisations – including politicians, unions, the media and the Church. “Probably the only things that are trusted now are social media (which can be manipulated) and the military,” he adds. And although he agrees
“immediately went into crisis”, with
hard to raise awareness of the
businesses need to speak out on
share prices at each collapsing.
need for regulatory reform in the
important issues, he maintains it
“I’m not sure people didn’t think I
industry and his high standards of
will be hard while public confidence
was a bad omen,” he laughs, joking
corporate governance and ethics
in them is lacking.
that at times he thought the only
have led to him becoming a well
But Rake has been involved in
thing to do was pay a visit to St
respected member of the BT Group
building businesses back up from
Paul’s – the cathedral that looms
board,” the judges said.
low ebbs before. It has been six
large in his BT office window. “But
years since he left KPMG to start
all three are great organisations
quality of people and thought
what he sees as essentially a new
and all three have pulled through
at the CBI, of his own skills he
career as a pluralist director. But the
this crisis – or are beginning to.”
simply says: “I hope I can use my
skills he learnt there – particularly
It was for his role at BT that Rake
And while Rake praises the
experience in professional services,
in terms of juggling issues being
won at the 2012 Non-Executive
at BT and public companies, in
faced by different clients – quickly
Awards, where he was praised for
banking and in private equity, to
came in handy.
his results-driven approach and his
get across the facts so that our
clear focus.
politicians, the trade unions and
Rake says his friends often joke that shortly after he took on the
“Sir Michael has often been
the public can understand the
roles at BT, Barclays and publisher
outspoken and challenged the
implication of policy matters on the
McGraw Hill, all three of them
thinking of others. He has worked
economy and employment.”
20
Busines s voice | September/october 2013
Interview: Sir Mike Rake
“”
Business is about taking risks, and after a crisis like that the truth is that your regulators and your banks all become risk averse
CV
Other roles: Chairman of the UK Commission
2007–present:
for Employment and Skills (2007-
Chairman, BT Group; non-executive
10); chairman of Business in the
director, then deputy chairman,
Community (2004-07); director of
Barclays; director, McGraw-Hill
the Financial Reporting Council
Companies; chairman, Easyjet
(2008-11) and a member of the
(2010-13).
prime minister’s business advisory
2002–07:
group (2010-12).
Chairman, KPMG International.
Rake is also chairman of private
1974:
Guidelines Monitoring Committee;
Joined KPMG, becoming UK
the Henley Festival; and of the
senior partner in 1998.
governors at Wellington College.
equity oversight group the
Busines s voice | September/october 2013
21
New generation The UK needs a secure, affordable and low carbon energy supply, but a combination of ageing infrastructure and slow policy progress means it’s in danger of not producing enough power of its own.
So what are energy firms doing to stop the lights going out?
22
Busines s voice | September/october 2013
securing Energy: New generation
“Industry asked to curb peak power use”
“Britain on the brink of running out of gas” …Just a couple of the newspaper headlines
encourage the £110bn investment needed to replace
over recent months highlighting that the
ageing assets by setting predictable revenue streams
UK’s energy future is not secure. Not to
for new projects. “Investors have more certainty, more
mention the furore caused by Ed Miliband’s
clarity than they had a year ago,” he says.
promise to freeze power prices if Labour wins the next election.
It has been slow progress until now though, which means that confidence hasn’t reached the ordinary
At the end of June, the energy regulator Ofgem
businessman yet. In the CBI’s latest infrastructure survey,
warned in its latest capacity assessment that, while
only 23 per cent of respondents said they were confident
it does not consider supply disruptions’ imminent or
that energy infrastructure would improve over the next
likely, “risks to electricity supply could increase during
five years – down from 33 per cent last year.
the middle of this decade faster than expected”
But there are significant new projects under way
without government reforms to encourage more
designed to explore and exploit the UK’s available
investment in generation. It went on to state that the
resources. In the North Sea, a new wave of investment
probability of a supply disruption would increase
will exploit new fields in the West of Shetlands area,
from the current one in 47 years to one in 12 years (or
while new technology is helping firms extract in more
lower) for 2015/16.
challenging situations. And developments in wind and
It’s a threat that energy minister Michael Fallon
tidal energy, new nuclear and shale gas could make
recognises. “There is an increasing risk of the lights
significant contributions to the UK’s future energy mix.
going out if nothing is done,” he agrees. “But plenty
Fallon appears confident. “We’re on the brink of a
is being done now. We are racing to catch up on a
new energy revolution, led by the private sector,” he
decade of underinvestment.”
says. But the companies involved all face challenges
He points to the Energy Bill, expected to reach the
to make that a reality. Here, speaking to Business Voice
statute books by the end of the year, which offers the
before Miliband’s comments, major companies explain
framework for electricity market reform, a capacity
what they’re doing to avoid the plug being pulled on UK
market and contracts for difference (CfDs) that will
growth.
Busines s voice | September/october 2013
23
Fracking: the future? Francis Egan, CEO, Cuadrilla Some people call shale gas a short-term opportunity,
There will always be some protests. You see
but the British Geological Survey estimates that there
that against all energy developments: wind farms,
are 1,300 trillion cubic feet in the ground in northern
solar, nuclear, coal stations, gas. But the fear and
England alone. The total UK gas demand is three trillion
myths can best be addressed through rigorous
cubic feet per year so we’ve got up to 400 years’ worth
independent academic studies. The most recent
of supply. Not all of that can be recovered of course,
study from the UK’s scientific advisor at DECC,
and assessing what percentage may be recoverable
for example, shows that methane emissions from
is one of the main objectives of Cuadrilla’s current
shale gas wells were expected to be comparable
exploration programme.
to conventional gas and lower than gas imported
We need to drill a relatively small number of wells
to the UK by ship or pipeline. There’s no data to
to assess the opportunity – as a country we’d be crazy
support the myth that shale gas is more harmful
not to. But using our conservative estimate, if you
to the environment than coal – the reverse is
could only get 10 per cent out of the ground, that’s
actually the case.
still 40 to 50 years’ gas supply. It’s not forever, but it
We need to get the facts out into the open and
will potentially play a very important role in the UK’s
as we develop a few sites people should see it for
energy supply.
what it is. It helps that Centrica has joined us in
Comparisons with the US at this stage are often
the licence in Lancashire, committing significant
misplaced. On one side people say that the US has
funds and contributing a lot of expertise. Seeing a
transformed its energy supply, lowered gas prices
company like Centrica put their brand behind this
dramatically and created hundreds of thousands of
is important for public confidence.
jobs. On the other, people say that it has polluted the water supply in the US. I think the UK will forge its own path, learning where it needs to from the US and making sure that we explore and extract shale gas safely and sensibly here. In Lancashire we have drilled three
The government has certainly been supportive of shale gas exploration but we need to translate policy into action on the ground. The UK economy needs energy and employment – and here’s an industry that could potentially provide a lot of both. The UK’s
shale gas wells. The government
businesses also desperately
took a cautious approach after the
need secure and cost-effective
seismic tremors in 2011, but at the moment we’re finalising site selection for a number of further exploration wells which we’ll announce within the next few
energy sources – if we outsource all our energy supply, we’ll end up outsourcing all our manufacturing and the associated jobs as well.
months. We’re completing planning applications and environmental impact assessments for those – that’s quite a lengthy process, so it will likely be the second
Fallon on fracking
half of next year before we are able to start activities
“This is unfamiliar technology and we’re going to
back on the ground again.
get used to it. There are still lots of things we don’t
There’s obviously been a lot of media attention
24
know and we’ve got a year or two of exploration
around our well in Sussex, which ironically is not a
before we can answer the questions. But we could
shale well at all, it’s an oil exploration well – there’s no
see an enormous boost to our industry if we can
fracturing going on.
get it out as cheaply as they’ve done in the States.”
Busines s voice | September/october 2013
securing Energy: New generation
“The UK will forge its own path, learning where it needs to from the US and making sure that we explore and extract shale gas safely and sensibly� Francis Egan
Busines s voice | September/october 2013
25
Wind brings opportunity Brent Cheshire, UK chairman, Dong Energy
Dong Energy has invested more than £4bn in the UK over the past few years. Originally we were very much an exploration and production (E&P) player – and there’s still a very good future for us in the new
“We’ve set ourselves the target of reducing the cost of current wind generation by 40 per cent by 2020” Brent Cheshire
fields, West of Shetland – but now 75 per cent of our investment is in offshore wind. With the addition of London Array, completed over
investment in Belfast Harbour, where we transport
the summer, we have installed enough offshore wind
our components and assemble them before
in the UK to power a million homes. We’re aiming to
installing the turbines in the Irish Sea. This has
generate three times as much by 2020. We’ve also set
created a lot of jobs and will hopefully seed local
ourselves the target of reducing the cost of current
industry. As a company, we’re trying to do more
generation by 40 per cent by that point.
things like this, but we can’t do it on our own.
The only way we can drive the cost of wind down
Politicians need to deliver what the industry
is if we have a full pipeline of projects, where we
needs. People look to industry to find the
can commit to things and learn as we go. This gives
solutions, but try telling our investors that.
us the opportunity to develop a more efficient process, bigger turbines and more modular foundations as we go into deeper water. Our pipeline is dependent on the
The predictability of the regime is particularly important as we have to spend tens of millions of pounds to determine whether we’re going to develop a site
new regime – coming off the back of
or not. And our experience on the
electricity market reform – giving us
E&P side has made us nervous –
the clarity that we need to ensure
our West of Shetland development
that we want to continue to invest.
was affected very badly by the tax
We’re starting to get that now, but we also need the supply industry, such as turbine manufacturers, to come with us. And there still isn’t a clear carbon
raid when the coalition came to power. When we arrived there was no infrastructure in that area whatsoever. For the Laggan–Tormore fields we’ve built
target after 2020, making it difficult to build the
the necessary pipelines – bigger than we needed,
case for people to develop skills, the workforce and
at the government’s request. Hopefully other
manufacturing in the UK. We risk losing a subsidy for
gas fields will come into production and use
not procuring enough in the UK [the government has
that infrastructure, but we essentially lost the
set a 50 per cent target], but we can’t actually buy it
tax allowance that helped pay for it. It made the
here. If that becomes the rule, we’ll go and do this
project more challenging that it needed to be.
somewhere else.
26
Saying that, we recently underwrote a £50m
Busines s voice | September/october 2013
securing Energy: New generation
Leashing the tide Mark Shorrock, CEO, Tidal Lagoon Power
The UK has the second highest tidal range in the world so it’s an obvious source when looking to fill our energy gap. We think there’s an opportunity to build five or more tidal lagoons around the UK, with 10,000MW installed capacity. The first is planned for Swansea Bay – a £650m-plus project, scheduled to go live in 2018, delivering 240MW (enough to power 120,000 homes) in
competitive with the price of nuclear. The cost of
an environmentally benign way.
power will be two-thirds of that generated by the
You don’t often get the chance for an energy plant to also become an amenity that can be loved – a tidal lagoon creates a sea reef, allowing the reintroduction of oysters or a mariculture farm; you can run around it and swim in it. We’ve been working hard to engage local people and to date we have 86 per cent support. And as we’re aiming to see 65 per cent UK content [in the procurement of components] for the project, local people recognise that there is an industry to be created – with the potential to export our expertise. Renewable energy sources can be criticised on two
first. What’s more, the lagoons will last for 120 years and there won’t be any decommissioning costs. In
“We know with 99.9 per cent accuracy how much power we’re going to make in any one stint” Mark Shorrock
30 years’ time, you’re looking at a cost of 1.8p/MWh. We now need to build that narrative and make the case to Treasury that a greater subsidy for the first
fronts: the predictability of the generation and cost.
is worth it – DECC is willing to negotiate a bespoke
You never know when the wind is going to blow,
CfD with us. Politicians are starting to see that we
for instance. But we know the size of the lagoon, the volume of water in it and the rate of water flow through our draft tubes – so we know with 99.9 per cent accuracy how much power we’re going to make in any one stint. And with different tide times for different locations around the UK, you are never not going to be generating. Power generated by the first lagoon will be relatively expensive – the first will
are serious. They are recognising that there’s good capital behind this and there’s some very strong UK companies interested in seeing it achieved. Although tidal lagoons are not yet included in the Renewables Roadmap 2020, I’d like to think it will be firmly on it in a year’s time. And although we’ve been advised we’re unlikely to get funding from the Green Investment Bank before 2015, we’re already
be competitive with offshore wind. But by the third
on their radar. As with any new project, it’s all about
lagoon, economies of scale will apply and we will be
gaining acceptance.
Busines s voice | September/october 2013
27
Fallon on nuclear “The [strike price] negotiations are frustrating, very complex, and taking longer than anybody wanted, but I’m reasonably confident that we will get there. But it’s not just whether or not we do the deal with EDF. There is plenty of strong commercial interest from overseas investors [including Hitachi].”
“Our new nuclear programme will play a key role in meeting the country’s future energy needs and will rebuild an industry” Humphrey Cadoux-Hudson
28
Busines s voice | September/october 2013
© EDF Energy 2011
securing Energy: New generation
Nuclear progress Humphrey Cadoux-Hudson, head of new nuclear, EDF A new nuclear power station hasn’t been built in the UK
produced from Hinkley Point C. This must be a balanced
since 1995, but now new plants are planned to provide
deal, good value for consumers and offering a fair
the country with the reliable, low-carbon energy it needs
return for investors. For the first time, decommissioning
for the future. That has happened with strong cross-
and waste costs will be paid for as part of the
party political backing and a fundamental reform of the
agreement, so the total cost of the plant is taken into
energy market, providing the right conditions to attract
account.
investment.
The size of the project is immense – there will be an
The economic benefits and opportunities for the UK
estimated 50 million hours of construction work on site.
are considerable. It means re-starting the industry and
All that work has to be planned in detail so that it comes
the supply chain that will support new-build projects.
together at the right time. Our philosophy is that we’ll
That will strengthen the UK’s industrial stamina and allow
only start construction when we are sure we won’t have
businesses here to compete around the world for nuclear
to stop.
contracts. Safety continues to be our priority. Although the European Pressurised Reactor (EPR) is already being built
Although Hinkley Point C is our first new nuclear project in the UK, we’ve also been moving ahead with our plans for Sizewell C in Suffolk. If all goes well at Hinkley, we’ll go on to develop another two reactors
elsewhere in the world, the UK
at Sizewell.
regulator has gone through its own rigorous process to satisfy
The impact on skills and training
itself that the design meets UK
for the UK will be profound. We will
standards. This has involved
be training a new generation capable of taking on big infrastructure
850,000 hours of engineering design work and assessment. To win planning permission, we carried out one of the largest consultations of its kind over three years. We heard directly
projects as well as working in new nuclear development around the world. We have assembled a world-class team to make that happen with experience of successful
from 6,500 consultees, held 34 public exhibitions and 67
projects such as the Olympics and Terminal Five. We will
meetings with local authorities and other stakeholder
demonstrate again that we can build on time and on
groups. There were 109,000 visitors to our project
budget in the UK.
website. We also held a number of focus groups targeted
Our new nuclear programme will play a key role in
at people such as the elderly and hard-to-reach groups, to
meeting the country’s future energy needs and will
ensure no one was overlooked.
rebuild an industry. Once we’ve set the framework, I
We’re now in the process of finalising the main supply
will be very proud to see others building nuclear power
chain contracts and we’re working to reach an agreement
stations alongside us, hopefully benefitting from the
with the government over the price of electricity to be
work we’ve done to bring savings in time and cost.
Lighting the way Greater efficiency plays an important role in easing pressure on the grid. By July, British Gas had installed one million smart meters in consumers’ homes and businesses are already working with their suppliers to reduce their energy requirements. Read the CBI’s report into the energy efficiency opportunity at www.cbi.org.uk/shining-a-light Busines s voice | September/october
2013
29
TAX RULES.
There is a need to modernise tax rules for multinational businesses – but without undermining UK competitiveness. Words: Milda Jardine
W
hen it comes to businesses paying their fair share of tax, much of the debate is really about international tax rules. And not all of those written by the Organisation
for Economic Cooperation and Development (OECD) several decades ago have kept pace with globalised, and digital, business practices. There’s no doubt that the way in which multinational businesses are taxed should be modernised. The CBI’s recent report, Tax in a global economy: the way forward, calls for the UK government to spell out its principles for reforming international business tax
“”
Before making any changes to long-established international tax principles there must be convincing evidence that they would bring real benefits, not just increase administrative burdens for businesses
rules. But these recommendations also apply to other governments – business needs common and coordinated international tax rules so any changes must be applied consistently across borders.
30
Busines s voice | September/october 2013
www.cbi.org.uk/tax-in-a-global-economy
international: Tax
To keep the global playing field level, it is crucial that
principles there must be convincing evidence that they
different governments do not develop any changes to
would bring real benefits, not just increase administrative
the taxation of multinational businesses in isolation. The
burdens for businesses.
OECD, tasked by the G20, has been working on updating
In the UK, the need for greater business investment
international tax rules as part of the BEPS (base erosion
and exports is stronger than ever – any changes to
and profits shifting) project. Its action plan, released in
the international tax landscape should not undermine
July this year, includes proposals to tackle abuses of tax
the excellent progress on making the UK the most
treaties and prevent tax avoidance by shifting intangibles
competitive tax regime in the G20. So the UK needs to
between group companies. And with its ability to work
tackle tax reform at the international level, and for this
with a broad range of countries, and its track record as an
it needs to work closely with our competitors to get the
international standard-setter on tax, the OECD is the right
right outcome for everyone.
organisation to lead any substantial tax reforms.
The government needs to strike the right balance
But what often gets ignored is the fact that the current
between effective participation in the international
rules work in the vast majority of cases. Any changes to
process to revise the rules while delivering certainty
the way multinational businesses are taxed should be
and predictability to the system. It must avoid any
delivered through revising existing practices and not
consequences, intended or not, that might undermine the
by introducing radical and untested solutions. Before
UK’s tax competitiveness.
making any changes to long-established international tax
The UK’s Tax Competitiveness 100
(% of executives ranking the country 1st, 2nd or 3rd for most competitive)
2007 2008 2009 2011 2012 Source: KPMG Tax Competitiveness Survey, December 2012
80
60
40
20
0 IRELAND
NETHERLANDS
SWITZERLAND
LUXEMBOURG
UK
US
Busines s voice | September/october 2013
31
Bridge to the future Mersey Gateway – a new six-lane toll bridge over the River Mersey between Widnes and Runcorn – is one of the UK government’s top 40 priority projects in the National Infrastructure Plan. It was granted a 50 per cent government guarantee in the latest spending round.
But why is it so important?
The £600m construction project is expected to kick-start a 20-year regeneration programme.
32
Busines s voice | September/october 2013
470 jobs will be created by the construction phase, but 10x that number of permanent new jobs will be created through direct employment, regeneration activity and inward investment.
building britain: Mersey Gateway
It is hoped it will boost the local Halton economy by nearly £62bn by 2030
More than
80,000
vehicles use the nearby Silver Jubilee Bridge every weekday – ten times the number it was originally designed for. Once the Mersey Gateway is in place, 80% of traffic is expected to divert onto the new bridge, freeing up the
and support sustained growth at
Silver Jubilee Bridge for local traffic.
Liverpool Ports and Liverpool John
Both will be tolled.
Lennon Airport.
9.5km 70%
downright The preferred bidder is Merseylink group, comprising Macquarie Capital Group,
The length of the new road which
of the project will be funded by the
Bilfinger Project Investments
will connect the national motorway
private sector.
Europe and FCC Construcción.
network in north Cheshire with Merseyside.
downrightTheconstructionjointventure involves Kier Infrastructure and Overseas, Samsung C&T Corporation and FCC Construcción. downright They will deliver and operate the tolling element for the consortium. Procurement contracts are expected to be finalised by the end of the year.
Busines s voice | September/october 2013
33
Charting business growth & investment around the UK Mark Group
McErlain’s Bakery
Polaris Media
has been named the strongest
is creating 100 new
has seen its turnover grow
performing private British
production jobs with a £1.4m
by a third to £250,000 during
company for overseas sales in
investment. The company,
its second year of trading.
The Sunday Times International
based in Magherafelt, County
The public relations firm,
Track 200. The Leicester-based
Londonderry, has already
based in Merseyside, also
energy-saving solutions
created 35 of the new positions.
recently won two new clients:
provider employs around 2,500
The remaining 65 will come
Hugh Baird College in Bootle
staff and has average annual
over the next two years,
and Birkenhead-based
international sales growth of
alongside investment in
manufacturer and outfitter
over 500 per cent. Much of
new machinery and product
MPE Interiors. The firm, which
this growth has been down to
development. The family
is run by brothers Sam and
business secured in Australia
firm, run by six brothers, has
Ben Pinnington, plans to target
and the US, with the company
doubled its turnover in the past
maritime, engineering and
also experiencing rising sales at
four years. It makes a range
manufacturing sectors, as well
its operations in New Zealand.
of baked goods under its own
as exports, for further growth
International sales now account
Genesis Crafty brand, as well as
in 2013/14. Ben Pinnington said:
for over £27m of the company’s
own-brand products for major
“The past six months have
£190m turnover. Executive
supermarkets in the UK and
seen us develop an extensive
chairman Lee Cottingham said:
Irish Republic.
pipeline of leads across these
“Our overseas business is an
industries regionally, nationally
important part of our operation
and internationally.”
but it simply couldn’t have been achieved without the foundation of years of strong growth here. We increased revenue by 50 per cent in the UK last year and made significant investments in new personnel to meet increasing consumer demand for improved energy efficiency measures.”
34
Busines s voice | September/october 2013
CBI members: News in brief
Redwood Technologies has moved into new UK headquarters in Bracknell and
Sumerian
announced plans to recruit more
has attracted a £2.4m investment
than 20 new starters, growing
to accelerate its global expansion
staff numbers by 25 per cent. CBI
and the launch of its new
Titania
director general John Cridland
‘software as a service’ (SaaS)
has reached an export milestone,
recently visited the new premises
predictive analytics platform,
as a recent order brought the
to meet the firm’s founders, Sean
Sumerian Workbench. The
number of countries in which
and Martin Taylor, and discussed
investment in the Edinburgh
its software is used to 50. The
issues including intellectual
IT analytics company is being
Worcester-based developer has
property and government
led by Scottish Equity Partners,
seen huge international interest
procurement. Cridland said:
alongside the Scottish Investment
for its Nipper Studio software,
“Companies like Redwood
Bank, the investment arm
a security and compliance
Technologies have a really
of Scottish Enterprise. The
auditing tool for network devices,
important role to play in driving
Workbench platform is currently
and around 90 per cent of the
growth and I was delighted to
in open beta, allowing users free
company’s revenues are now
see their offices buzzing with
access to run their own predictive
generated by exports. Customers
apprentices and graduates.”
analytics in the cloud in order
include leading telecoms, IT
Redwood has also opened an
to identify cost savings and
and financial services firms, as
office in The Hague to support its
performance gains on their
well as major US government
expansion into mainland Europe.
IT estates.
departments.
Let us know your news at edit@businessvoice.co.uk Busines s voice | September/october 2013
35
Recruitment agency Add-Victor is finding second careers for former athletes and military personnel. By keeping his eye on the ball, founder Steve White-Cooper is confident of driving business growth.
Personal best
36
Busines s voice | September/october 2013
member profile: Add-Victor
“Name a company out there that
then launched his own business
doesn’t want somebody who is a
recruiting predominantly for the
strong communicator, a team player
banking sector. “What I learned
with integrity and the ability to
through that episode was that there
learn fast”, says Steve White-Cooper,
was no difference between sport and
founder of Add-Victor, a recruitment
business. It came down to hard work
agency focused on helping
and I had to use the skills I believe I
ex-sportsmen and women and
got from sport,” he explains.
former armed forces personnel into business careers. He says his candidates have
He soon realised the synergies between sports and the armed forces in terms of the skills they had
already proven that they have these
and that businesses required – and
skills and therefore stand out from
the similar challenges faced by both
the typical graduate recruit. “Some
in adjusting to the world of work.
companies have even said that they are bored of the types of individuals they are attracting,” he says. “They’ve all got great academics, they’ve started a charity, they’ve climbed a mountain and they’ve been trained so well in interview techniques it’s difficult to tell them apart.” But White-Cooper found from personal experience that the transition from sporting success to the world of work can be difficult. After university he played for rugby union club Harlequins for five years, winning two caps for England. When he stopped playing at the age of 27 he found work in the insurance industry, but left after 18 months. After nine months out, he was helped into a job in executive search – growing with one company to become its number two. He
A golden opportunity Despite a depressed labour market, Add-Victor’s launch – in October 2011 – was timely, considering the build up to London 2012. “The success of Team GB acted as a great stepping stone for us,” White-Cooper says. The company made its first placement in October 2012. He admits that sport is a good hook that helps him get a foot in the door of the offices of global chief executives. He refers to the “unique sales angle” and the “CSR and branding opportunities” around recruiting past or current sporting stars – even if and when the memory of London 2012 fades. But he also emphasises the academic achievements of the candidates on his books. Busines s voice | September/october 2013
37
Tom James, GB rower, 29 James is a double Olympic gold medallist, winning in the coxless fours in both Beijing and London. He made his first appearance for GB as a junior in 2001, and as a senior in 2003. He also represented Cambridge University in the Boat Race four times between 2003 and 2007. In 2009 he was awarded an MBE. James indicated he might retire in the run-up to last year’s Olympics, saying: “It might be time to look at other things in my life”. He is now set to join management consultants Oliver Wyman on a fulltime basis in October. “During my own transition I’ve been able to see the value that businesses put on those individuals who can show a high level of drive, communication and clear understanding of teamwork. These are all characteristics that are practised and required of top-level athletes every day,” he says.
“The last thing I want is for
skills they looked for in potential
athletes to be seen as a bit of a
employees. Findings also suggested
gimmick,” he says. “These people
that graduates who engaged in sport
are looking for a long-term career;
had a higher earning potential.
they’ve sacrificed huge amounts to get there. Every industry has different entry requirements; some require a first-class degree from a top business school, others are more about personality. It’s got to be about finding the right opportunity for the right individual.” He points to recent research by the Sport Industry Research Centre at Sheffield Hallam University, in which 51 per cent of graduate respondents credited involvement in sport with helping them to develop the teamwork skills and leadership qualities they needed in the workplace. Meanwhile, 94 per cent of the employers surveyed identified a clear link between sports and the 38
Busines s voice | September/october 2013
Refining the strategy Despite the strong reasoning, White-Cooper confesses that he occasionally gets carried away with the idea rather than focusing on the reality. “You can initially get caught in the euphoria of a pat on the back rather than actually making it in business,” he says. But this is also an area where he has used his client base, and their good will, to his advantage: he has turned to them for advice, rather than using any formal business support services in establishing his company. And his ambition – which he again credits to his sporting background
Founded:
October 2011 Staff:
Five Candidates:
60% athletes; 40% military officers Clients include:
Aon, Almirall, Financial Times, Oliver Wyman & Santander.
member profile: Add-Victor
Ashleigh Ball, GB hockey player, 27 Ball competed for England at under-16, 18 and 21 level, made her senior international debut in 2008 and has 30 caps for GB to her name. She won a bronze medal in London 2012 and is currently training for the Rio Olympics in 2016. With a BSc in medical sciences and a masters in nutrition, Add-Victor has been able to help her into a parttime role at pharmaceutical company Almirall, allowing her to continue her training, while building a longer-term second career.
– means that he is pursuing new
from elite sports and the armed
opportunities for the business all
forces – to the extent that Add-
the time.
Victor is now offering training
Although it’s still early days, he says Add-Victor has seen “growth quarter on quarter”. It is already
and development packages to its corporate clients. “The idea is to make the
involved in both full-time job
employees better team players,
placements and internships. In
those who will be able to participate
October the company is launching
and think critically within the team
a ten-strong internship programme
environment and therefore add
with a US tier-one financial
greater value to their managers
institution, and it is now looking at
and the company as a whole,” he
what it can do with organisations on
explains.
the apprenticeship side of things.
Drawing on his own experience,
White-Cooper is also keen to
he adds: “The last thing you’d want
expand the company internationally
to do is fill a room with 15 rugby
and extend its reach in the military
players. But put a few of these
(it currently only deals with former
individuals within a particular
officers) and into other niches.
division, get them to look at it from
“This could potentially include
a different perspective, to try to
musicians,” he says.
raise the bar internally – and they
And he is adamant that companies can learn a great deal
“”
It’s got to be about finding the right opportunity for the right individual... Steve White-Cooper, Founder, Add-Victor
could help take a company to the next level.” Busines s voice | September/october 2013
39
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Busines s voice | September/october 2013
Member clinic: How to hire an apprentice
How to hire an apprentice Ben Bengougam, vice president human resources EMEA, Hilton Worldwide believes launching an apprenticeship scheme is a win-win – preventing a “lost generation” of young people while addressing critical staffing needs. A year after the launch of the hotel’s chain Apprentice Academy he explains how it was set up.
Q. How have you found
Hilton Worldwide.
A. Our Chef Apprenticeship
Apprenticeship Academy? What
Q. How did you decide
Academy trained more than 60 apprentices and more than 95
does it offer?
which areas of the business to
per cent of participants secured
A. We launched the Hilton
include in the programme and
permanent employment. This gave
how did you choose locations?
us a strong platform to effectively
with the aim of attracting young,
A. Throughout the process of
engage multiple properties and
energetic people into an industry
designing and implementing the
with long-term and varied career
scheme we were very much led by
centrally.
opportunities. Participants focus
business need. We worked with our
on one of six areas: professional
hotel operators to identify where
cookery, front desk, food and
there was a skills gap, focused
beverage service, multi-skilled
our apprenticeship recruitment
hospitality service, and exercise
on filling this need, and
and fitness.
matched each apprentice
the first year of the Hilton
Apprenticeship Academy in 2012
The scheme is fully funded, including tuition fees and travel expenses to additional workshops and events, plus participants receive a salary while in the programme.
them continued employment with
coordinate the wider scheme
individually to the hotel and role we felt would best suit them.
Q. Hilton
We received approximately 5,000
previously
applications this year and exceeded
ran a chef
our aims, placing 115 apprentices,
apprenticeship
25 at a time, in roles at 32 locations
programme –
across the country. The first group of
how did that
apprentices complete their course
experience help?
in October and we’re offering all of Busines s voice | September/october 2013
41
Member clinic: How to hire an apprentice
It also helped us to recognise the importance of preparing our hotels for how they can help new apprentices, many of whom haven’t previously been in a working environment, to hit
to the hotels the benefits that they would see in the long term from having an apprentice. However, we now have so many examples of how it’s worked well for our properties that this won’t be a problem next year.
Q. Is the cost of hiring an apprentice worth it?
A. We are confident that the investment we make in hiring and training our apprentices is justified
the ground running. Fostering
by the return. Our focus now is
positive relationships between
ensuring we keep those apprentices
existing hotel team members and
in the business, so that our
apprentices is vital.
investment grows in the long term.
Q. How did you select
Q. What would be your
your training provider?
advice to other CBI
A. We knew it was
important that we partnered with the right training provider: it took us nine months to choose. We worked closely with the National Apprenticeship Service (NAS) during the tender process, narrowing it down to three suppliers. We eventually selected Lifetime UK as it was willing to work closely with us and be flexible about our needs, helping us to devise a programme that mixed on-thejob training from professionally qualified experts and mentors with development workshops and master classes. We combined Lifetime UK’s experience and advice with our knowledge of the business.
Q. What was the biggest challenge?
A. There have been many
challenges for the team running the programme. They had to ensure the scheme worked across all regions and functions – not an easy task when recruiting for more than 46 properties. In implementing the scheme we had to demonstrate
42
members considering hiring apprentices?
A. My number one piece of advice would be to engage with the NAS (www.apprenticeships. org.uk), which will provide invaluable support in deciding on a model and supplier that will work for you. Second, don’t develop your programme in an HR silo. Ensure you are working closely with all
Q. How are you making sure that potential applicants hear about the opportunities available?
A. Our approach has evolved over
time. We’ve used online job boards, including Lifetime Zone and the NAS website, as well as fostering partnerships with Jobcentre Plus and various connected sites. We’ve also trialled specialist sites such as www.notgoingtouni.co.uk, as well as advertising opportunities on our own site, www.hiltonworldwide.com/ careers. In addition to attending a number of careers fairs, we’ve used our career-focused Twitter and Facebook pages.
Busines s voice | September/october 2013
aspects of your company in order to meet the needs of the business. Investing in this scoping exercise in the first instance will pay dividends later. Third, it’s important to keep an eye out for best practice examples. Companies have so much to learn from each other in the area of apprenticeships. Again, the NAS can provide opportunities to meet with like-minded HR professionals from different sectors to share experiences.
Read the CBI’s Tomorrow’s Growth report on the need for alternatives to university education:
www.cbi.org.uk/tomorrows-growth
more
than
95%
of participants secured
permanent employment
Busines s voice | September/october 2013
43
News & events from the CBI The female economy
business techniques and marketing strategies targeted at women, and if they will be
In response to the growing number
better placed to formulate these by having
of studies showcasing that today’s
greater diversity in their workforce.”
women are earning, spending and influencing spending more than ever before, the CBI is currently conducting research with AT Kearney into the female economy. Katja Hall, the CBI’s Policy Director, said: “The key issue is whether UK businesses will be less competitive globally if they do not have specific
The CBI is asking its members, across the country and from businesses of all sizes in all sectors, to provide their insights into the female economy by taking part in a short online survey.
The survey will take no more than 10 minutes to complete: bit.ly/female_economy
Upcoming events
Growing Business Awards
Public service podcast
Companies including Acturis, Chase Distillery, Eco-
As part of its public services reform campaign, the CBI
Plastics, Offshore Group Newcastle, Secret Escapes
is recording a series of podcasts. The latest focuses on
and Zoopla Property Group have made the shortlist
health and social care integration, which is set to benefit
for this year’s Growing Business Awards. The awards,
from an increase in funding from £0.9bn to £3.8bn after
launched by Real Business and the CBI in 1999, recognise
the government’s spending review. It features CBI head
high-growth, mid-sized and entrepreneurial businesses
of public services reform Jim Bligh chairing a discussion
in the UK. The winners of all categories will receive
with PPL’s managing director Claire Kennedy, Serco
membership to the CBI.
Health’s strategic development director John Myatt
The event is being held on 23 October at London
and iMPOWER director Jeremy Cooper on the benefits,
Marriott Hotel, Grosvenor Square.
gba.realbusiness.co.uk
44
Busines s voice | September/october 2013
barriers and practicalities of an integrated system of care.
To listen ^ subscribe, go to bit.ly/CBI_podcasts
CBI diary: September/October 2013
Regional events
East Midlands: Annual Dinner with Sir Mike Rake and Radio 4’s Justin Webb Date: Thursday 31 October Venue: Athena Theatre, Leicester International trade lunch with Kevin Oakes, CEO, Steelite International, and Simon Moore, CBI international director Date: Thursday 5 December Venue: Royal Crown Derby, Derby Email: sarah.wood@cbi.org.uk
East of England: Lunch with CBI’s Director of Economics, Stephen Gifford Date: Tuesday 29 October: Venue: City House, Cambridge Midwinter Lunch Date: Friday 13 December Venue: Tattersalls, Newmarket Email: nikki.campin@cbi.org.uk
Northern Ireland: HR Leadership Conference Date: Thursday 14 November Venue: Belfast Campus, University of Ulster Email: anthea.savage@cbi.org.uk Public Procurement Conference with minister Simon Hamilton Date: Wednesday 27 November Venue: Hilton Templepatrick Email: david.fry@cbi.org.uk Festive Networking Date: Thursday 5 December Venue: Radisson Hotel Belfast Email: anthea.savage@cbi.org.uk
North West: Annual Dinner with Sir Charlie Mayfield, Chairman, John Lewis Group Date: Tuesday 19 November Venue: Imperial War Museum North, Manchester Email: angela.gault@cbi.org.uk
Wales: North Wales MP Debate Date: Friday 18 October Venue: Northop Country House Hotel Dinner with Secretary of State for Wales, David Jones MP (Invitation only) Date: Wednesday 6 November: Venue: Lancaster House, Westminster, London Annual Dinner with Keith Williams, CEO of British Airways and BBC’s Robert Peston Date: Thursday 5 December Venue: City Hall, Cardiff Email: amanda.buckley@cbi.org.uk
West Midlands: Business Breakfast with Phil Smith, CEO, Cisco Date: Thursday 23 October Venue: Aston Villa Football Club, Birmingham International trade lunch with Kevin Oakes, CEO, Steelite International, and Simon Moore, CBI international director Date: Thursday 5 December Venue: Royal Crown Derby, Derby Email: julia.fox@cbi.org.uk
Scotland: Westminster Parliamentary Reception Date: Tuesday 29 October Venue: Scotland Office, Whitehall, London North East Dinner Date: Thursday 21 November Venue: The Marcliffe Hotel, Aberdeen Westminster Reception Date: Wednesday 4 December Venue: Scotland Office, Whitehall, London Email: colette.cunningham@cbi.org.uk
South West Economics Dinner with Ian McCafferty, MPC member, Bank of England Date: Wednesday 16 October Venue: Reed Hall, University of Exeter Email: amanda.buckley@cbi.org.uk Annual Dinner with Neil Bentley and Alastair Campbell Date: Thursday 21 November Venue: Brunel’s Old Station, Bristol Email: emma.georgiades@cbi.org.uk Busines s voice | September/october 2013
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Busines s voice | September/october 2013
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