Business Voice - September/October 2013

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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

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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

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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

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“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

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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.”

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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

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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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Digital design Amy Willoughby

Creative director Nick Dixon

Publishing director Ian Gerrard

Contact the CBI 020 7379 7400 www.cbi.org.uk

Tell us what you think businessvoice@cbi.org.uk Opinions expressed do not necessarily reflect the policies of the CBI. Caspian Media Ltd and the CBI accept no responsibility for the views expressed by contributors.

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Busines s voice | September/october 2013

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