Briefly Legal - Winter 2012 by Watson Burton

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Investing in the north east

NewcastleGateshead on the world stage

BRINGING NEW LIFE TO OLD LAND James Poyner of Miller Argent discusses the largest reclamation project in Western Europe and its impact on economies worldwide

BUILDING A STORY OF GROWTH Gerry Choat of Story Homes looks at the major challenges facing the UKâ&#x20AC;&#x2122;s housing industry post-recession

BIM BOOST FOR BUILDING Four experts offer their perspective on the strengths, opportunities and challenges of BIM for the construction industry

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A positive outlook The London Olympics, the Leveson inquiry, a double dip recession and the Queen’s Diamond Jubilee 2012 has certainly been a year to remember. The UK has taken centre stage on a number of levels. Whilst the outlook for UK business remains mixed, recent figures released by the Office of National Statistics (ONS) are positive, indicating a 0.1% growth in the economy since the end of the summer. This has been attributed to the Olympic Games, which was hailed a huge success. What was the key to this success? Excellence in performance and delivery, and confidence – all of which were communicated carefully and enthusiastically to the wider public. Once it was revealed that London was to host the Olympic Games, both the Coalition and Labour Governments promoted the City as a hub of economic prosperity and innovative thinking. In doing so, they have raised the profile of our capital city on an international level.

Every business needs to ensure the quality of its product and service delivery – and then make sure that its potential customers (and clients) are aware of that expertise and quality of provision. Being good is pointless if no one knows about you. Positioning your business and its product is essential. Watson Burton has positioned itself in the commercial arena as a law firm providing a quality legal service to clients nationally and internationally, with particular emphasis on service delivery. In this edition of Briefly Legal, we feature articles which emphasise the importance of differentiation and market positioning. NewcastleGateshead Initiative in the context of inward

investment and Miller Argent in the highly regulated yet competitive opencast coal sector. We also provide informed opinion on “crowdfunding”, the commercial implications of the Government’s energy efficiency strategy and advise you on the intricacies of risk management. I hope that you enjoy reading this latest edition of Briefly Legal and it provides you with some food for thought. Finally, let me be the first to wish you all a very Happy Christmas and a healthy and prosperous 2013.

Gillian Hall Senior Partner Watson Burton

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Putting NewcastleGateshead on the world stage Catherine Walker, Inward investment Director at NewcastleGateshead Initiative, outlines the agency’s challenges in promoting inward investment into the North East

Crowdfunding: the key to kick-starting business investment?

16 Energising future skills 32 Planning for Jim Hubbard of Newcastle College explains the reasons behind the creation of a purpose built energy academy and its role in bridging the national skills gap for the sector

18 An energy revolution Lawyers from Watson Burton’s energy group answer questions on the Government’s Energy Efficiency Strategy

Watson Burton’s Andrew Francey analyses how innovative financing model, crowdfunding, is fast becoming the preferred investment option for start up businesses

10 BIM boost for building 22 Bringing new life Four experts offer their perspective on the strengths, opportunities and challenges of BIM for the construction industry

14 Managing risk Professional indemnity lawyer, Michelle Levin, discusses the importance of risk management for business

to old land James Poyner of Miller Argent discusses the largest reclamation project in Western Europe and its impact on economies worldwide

26 In the frame? Watson Burton associate, Andrew Poyner, offers an insight into the continuous debate on Framework Agreements in the UK

28 Building a story of

sustainable growth Watson Burton’s Head of Planning, Bryan Riley, explains the implications of the Government’s proposed reform of the UK’s planning system

34 Hedging Claims: Is now the time to act? Andrew Johnson, Head of Watson Burton’s Commercial Litigation group, discusses what action to take when considering cancelling hedging products

36 Prime positioning Watson Burton’s CEO, Patrick Harwood, authors the second in a series of articles looking at the firm’s five strategic priorities

38 An enlightening partnership An interview with Gillian Hall of Watson Burton and Carolyn Ball of Tyne & Wear Archives and Museums on their commitment to celebrating arts and culture

growth

This is a Carbon Balanced Publication. The full carbon impact of this document has been offset by the conservation of endangered tropical rainforest in association with the World Land Trust.

Gerry Choat of Story Homes looks at the major challenges facing the UK’s housing industry postrecession

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Putting NewcastleGateshead on the world stage

Putting NewcastleGateshead on the world stage CATHERINE WALKER, INWARD INVESTMENT DIRECTOR AT NEWCASTLEGATESHEAD INITIATIVE, THE DESTINATION MARKETING AGENCY, IS TASKED WITH PROMOTING THE STRENGTHS OF NEWCASTLEGATESHEAD TO ATTRACT INWARD INVESTMENT FROM THE UK AND OVERSEAS. SHE TELLS BRIEFLY LEGAL WHY SHE AND HER TEAM ARE OPTIMISTIC ABOUT WINNING BUSINESS FOR THE AREA.

NewcastleGateshead Quayside

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Putting NewcastleGateshead on the world stage

role is to help NewcastleGateshead Initiative gain a greater competitive edge in attracting new investment and jobs to the area. We aim to make it as easy as possible for national and international firms to relocate to Gateshead and Newcastle.

Over the last 12 years, NewcastleGateshead Initiative has raised the profile of the area as an exciting and cultural city-break destination. Now the challenge is to attract businesses to locate and grow here and there is fierce competition from major cities across the world.

ATTRACTING INVESTORS It’s my firm belief that NewcastleGateshead and the wider area offer unique assets that will continue to be attractive for investors, bringing new jobs and long-term opportunities. We’re talking to businesses from across the world keen to look at the possibility of relocating here. We have a number of investment projects in the pipeline spread across the globe, in the Middle East, Far East, America and Europe and we’ve already supported a national firm, Checkatrade.com, to open up a regional sales office in the area.

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Putting NewcastleGateshead on the world stage

Angel of the North

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Putting NewcastleGateshead on the world stage

STRONG SECTORS

PARTNERSHIP APPROACH

We are in the process of initially building our presence in the North American, Canadian and Indian markets, identifying opportunities for us to discuss potential expansion plans with companies at the right phase of growth. These countries are important targets for us. India is seeing a huge amount of outbound investment into Western Europe and the UK.

We are focused on promoting key business activities in the area, such as R&D, business and professional services and advanced manufacturing to inward investors. We can also show potential investors compelling competitive advantage in key sectors such as science and health, creative and digital (including IT and software) and offshore and marine.

Our team works with NewcastleGateshead Initiative’s current 170-strong partnership to support their work but also to tap into their excellent national and international networks. The partnership is supportive and extremely diverse, including local government, law firms, retailers, architects, developers, hotels and restaurants.

We are also hoping to take advantage of market conditions in Canada, particularly around its video games clusters. The North East has a thriving digital and creative cluster and we aim to present the region as a favourable alternative location for video gaming companies in Canada.

Our team provides a bespoke service to potential and existing investors. Support includes research to help define the business case; advice and access to funding solutions; property solutions; introductions to business networks and centres of excellence; assistance with recruitment and future talent provision and PR and marketing support.

This collaboration means we are able to respond effectively to exciting investment opportunities. Our priority is to create the best possible conditions to attract new investors and create the jobs of tomorrow

I joined the NewcastleGateshead Initiative from MIDAS, the inward investment agency in Manchester, earlier this year, and I was well aware of NewcastleGateshead Initiative’s track record promoting the area within the UK and around the world, with high points including its award-winning work on the 2005 Tall Ships’ Races. When you put together the world-class culture, vibrant night-life and wonderful heritage, with our sector strengths, the skilled, loyal workforce and competitive property and labour costs, you get a really strong message for businesses looking to expand overseas or relocate.

Catherine Walker, Inward Investment Director at NewcastleGateshead Initiative

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Crowdfunding: the key to kick-starting business investment?

Crowdfunding:

the key to kick-starting business investment? 8

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Crowdfunding: the key to kick-starting business investment?

Volatile markets and a decline in access to conventional lending has forced businesses to consider alternative sources of funding. As a result, innovative financing models such as crowdfunding are fast becoming the preferred platforms to secure investment for start up businesses. Corporate partner Andrew Francey explains.

Crowdfunding, a concept which originated in the United States, is gaining popularity in the UK as a means of raising relatively small amounts of capital from a large number of individuals (the “crowd”) and is most commonly used to finance a standalone project or a start up. The premise is that a business or individual explains their project in the form of a pitch, usually via a specialist website or social media, with a view to attracting financial contributions from as many individuals (or investors) as possible. Those investors can contribute perhaps as little as £10 or as much as they wish in return for an interest in the business or project.

Kick-starting investment One of the most successful specialist websites to facilitate crowdfunding is Kickstarter, which recently launched in the UK. Established in the US in 2009, Kickstarter acts as a catalyst for investment in creative or product-based ideas and claims to have so far raised more than £211m ($340m). It reports that, since its launch, more than 70,000 projects have been pitched with a success rate of just over 40%. Kickstarter is hoping to replicate that success in the UK by providing small organisations

crowdfunding. The FSA has clearly emphasised the complexities surrounding business investments for inexperienced investors who may not be aware of the risks involved. In fact, to this end, the FSA went so far as stating: “We believe most crowdfunding should be targeted at sophisticated investors who know how to value a start up business, understand the risks involved and that investors could lose all of their money”.

Legal and regulatory restrictions For crowdfunding platforms themselves and for business seeking crowdfunding, there are legal and regulatory issues that need to be carefully considered such as:

2006 relating to companies offering any of its securities to the public. There are currently novel ways of structuring crowdfunding platforms to steer around the relevant restrictions. One key message to emphasise, however, is that any business seeking finance through a crowdfunding platform should take appropriate steps to ensure that the platform is properly established and complies with all relevant and applicable regulations and legislation.

The future of crowdfunding

The launch of Kickstarter and other crowdfunding platforms with an opportunity to secure has inevitably pushed crowdfunding from alternative sources. funding and other alternative financing models to the forefront For businesses, crowdfunding • if “regulated activity” (including, of the investment agenda. could be a very useful way to for example, certain types of gain direct and quick access investment activity) is being Whilst it clearly does not come to multiple investors and their carried out and no exemption without risks for potential funds where money from a applies, FSA authorisation will investors and indeed those bank (or indeed other sources be required seeking funding, crowdfunding of finance through more as a concept could still prove to • unless an exemption applies, traditional investors or venture be an innovative alternative and the business is FSA authorised capitalists) is not available. quick way to raise capital. or the pitch itself is approved Subject to how the business or For an investor there are a number by an FSA-authorised person project for which crowdfunding of potential risks, including: then, where a business is sought pans out, it can also • there is no guarantee an investor “communicates an invitation provide those seeking funding or inducement to engage in will receive a return on his or with easy access to a network of investment activity” it will be her contribution any time soon interested individuals for future in breach of the rules relating (if at all) funding rounds. to “financial promotion” • an investor may well receive a The key to the success of crowd• unless an exemption applies, it share of a business or project funding in the UK is likely to is unlawful to offer transferable but that share may be diluted depend on whether or not the securities to the public in the by further investments from right balance is achieved by the UK without preparing and other investors in the future regulatory authorities between making available an FSAprotecting potential investors • it is unlikely that an investor approved “prospectus” whilst maintaining the flow of will be able to sell his or her capital to entrepreneurial share in the business or project • there are certain restrictions businesses. set out in the Companies Act as shares in crowd funded businesses or projects are likely to be illiquid • there is perhaps a higher risk of fraud linked, in part, to the online processes used. With this in mind the UK’s financial services regulator, the Financial Services Authority (FSA), has recently advised caution to “novice investors” actively participating in

Crowdfunding as a concept could still prove to be an innovative alternative and quick way to raise capital

Find out how our corporate group can help you by getting in touch with Andrew Francey. Call 0845 901 0958 or email andrew.francey@watsonburton.com

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BIM boost for building

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BIM boost for building

Governments around the world are increasingly mandating the use of Building Information Modelling (BIM) techniques in order to achieve significant cost and environmental savings on their construction projects, and to gain insights into the performance and operation of their existing assets. BIM involves the interaction of many technologies operated by numerous organisations in complex supply chains. As the concept of BIM becomes more prominent in the construction sector, we speak to four people involved in the process to hear their different perspectives on the issue.

Richard Shennan, Director and BIM champion at Mott MacDonald: Richard Palmer, head of Watson Burton's Professions and Insurance Group: Stefanie Stead, a chartered architect with Pearce Bottomley Architects and chair of the Yorkshire and Humber CIC Committee: and Andrew Poyner, construction and engineering associate at Watson Burton offer their views about the strengths, opportunities and challenges of BIM.

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BIM boost for building

Richard Shennan: I believe BIM contributes to faster, safer, less wasteful construction, and more cost-effective, sustainable operation, maintenance and eventual decommissioning. Stefanie Stead: Collaboration is the key to success – BIM is as much about people as it is process and technology. Richard Palmer: Time will tell as to the extent to which claims will be reduced through BIM and whether significant costs savings will be achieved through using BIM when disputes are unavoidable. The potential, however, would appear to be substantial. Stefanie Stead: BIM can potentially increase the efficiency of design teams by reducing the number of problems that have to be resolved on site, and the time and effort required in checking on them. Richard Shennan: I agree. Risk and insurance are important considerations which I believe BIM addresses effectively. The key thing from a legal perspective is how the model is put together. The structure of our federated model means that increasing interoperability and collaborative data exchange allows a number of co-ordinated models to behave as if they’re a single entity.

Provided that a strong information management system based on the federated model is put in place, the concerns of the legal profession about the apportioning of risk and liability can largely be laid to rest. There could be further benefits in collaborative contracts and integrated insurance, but we can use BIM effectively even under current contracts subject to protocols, tracked detail and management systems. Richard Palmer: BIM should enable problems such as clashes between designs of the different teams or programming issues to be detected early before they become embedded. These can then be resolved before the construction project is completed. In turn, this should reduce the incidence of claims. Where claims do follow, quantum should be less because problems can be resolved earlier. Stefanie Stead: The main misconception about BIM is that you need to invest in the 3D software. A lot of smaller practices – architects, surveying, engineers – are concerned about how they can make this investment when banks are not lending. I’ve had professionals saying to me that it’s all very well the government saying that BIM is an investment for the future, but where is the money to come from to pay for it? We all need to get across the fact that BIM is all about managing information in a set format so you can use it throughout the lifetime of the building.

Richard Palmer: Yes I agree. Another popular myth is that if the design team are working on one combined 3D model (rather than each professional providing their own separate 2D drawings), it will be difficult to determine who is at fault for any problems that arise. In fact, as the design of an asset develops using BIM, a "frozen" version of the model is created with each addition to the process, so that there is a trail of responsibility. This trail should assist in resolving claims, where it is not possible to avoid them. Stefanie Stead: I believe SMEs can become involved in BIM. It is not complex nor is it a radical new system. The apprehension is that the investment for small companies is offputting but SMEs don’t need to invest significant amounts. It’s more about building a better information management system and manipulating the data effectively. Richard Shennan: The ownership of the components of our federated model is clearly understood by our clients and partners and maps on to existing contractual owners for example architects, structural engineers, building services engineers and civil engineers. Each can develop their own model which is brought together by BIM so they can be coordinated as a single central source. How the federated model is managed is critical. Stefanie Stead: I’m in a small practice and we are currently putting together a strategy, making sure we have the processes in place, and when necessary we have the software. Different people require different things – for example quantity surveyors don’t need CAD but do need the viewer. BIM is an evolution of the process that most practices already have in place, and we are simply fine-tuning it and making it clear to others.

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BIM boost for building

Richard Shennan: Guidance on collaborative working is provided in BS 1192 and the new PAS 1192-2. We use a ProjectWise file management package tailored to this standard. We know when models by one set of people are at a certain stage, shared and approved, both internally and externally. We know when they’re signed off and published and what purpose the model has. Tracking means everyone’s quite comfortable and aware of the level of detail from inception to completion. It prevents situations occurring which could be confrontational because everything’s tracked. Stefanie Stead: We need to embrace BIM but not as a sudden change. In my previous firm it took us a year or so. The take up of BIM in SMEs is as much to do with procurement as modelling. Andrew Poyner: BIM encourages collaboration and trust between members of the team, and brings real value to the client. Many larger competent organisations are operating at BIM level 2 but don’t realise it. To get to BIM Level 3 will, however, be a big cultural shift for many companies. Richard Palmer: A time sequence can be added with BIM which shows what the construction will look like at week 1, week 2 etc, to create a 3D construction programme. This allows better planning for temporary works that are necessary, helps to identify health and safety issues and allows all components to be tracked so that orders can be placed at the correct time. With fewer delays and safety issues identified and minimised, this should also mean fewer claims against contractors.

Andrew Poyner: With regard to contractual liabilities, an agreed form of "BIM Protocol" needs to be agreed between clients, contractors and designers within the industry and produced in such a form which is easily capable of forming a supplement to standard form contracts (e.g. JCT, NEC, ICE etc). There is currently much commentary on this point, and this is where the lawyers can add real value by clearly setting out the legal liabilities between the parties contributing to BIM and removing some of the mystery and misunderstanding that may exist within the industry.

Stefanie Stead: The government’s decision to make the use of BIM on all public projects mandatory has been a matter of concern to some smaller firms because the tender submissions require three years’ equivalent projects, during a time when few major construction projects have been started. This has resulted in some talented businesses not having a chance to put themselves forward. I’m hoping the procurement process will become more flexible as BIM evolves.

Richard Shennan: We can’t wait three years for new contracts to be written. We work with the existing contractual contract and IP. Protocols are emerging which set out the client’s requirements so that everyone can understand the rules of the game, and the UK Government task force is about to publish a standard template for a BIM Protocol. Each partner can work effectively to fulfil contracts and it provides a great foundation for interoperability between the tools we use.

Richard Shennan: BIM works best when all the key project players are collaborating and contributing. At Mott MacDonald we have strong leadership and belief in BIM, and it’s backed by the board and chairman and by BIM enthusiasts which helps to move it forward. We have it functioning top down and bottom up and we’re keen to communicate its benefits to outside parties - people don’t always get it until they see it. Our model and how it’s used is important, and we show rather than tell. It sparks enthusiasm from the clients too.

Richard Palmer: Because the BIM model can deal with and incorporate the manner in which the asset is to be operated in the future, owners should be clearer on how the design team expects the asset to run. We often see claims against a designer where the owner of an asset blames the design, and the designer says that the problems are down to poor maintenance/ incorrect operation on the part of the owner.

Andrew Poyner: What construction and associated industries need to appreciate is that BIM is relevant now - not in the future. Organisations are increasingly using BIM to bring about time and cost management benefits. If clients can start to see and understand the value of investing in BIM and the measurable capital savings it can reportedly achieve, then this will help speed up the process and assist the Government in achieving its BIM goals.

With BIM, it will be easier to determine these issues should they not be picked up prior to completion of the construction. This may save costs when a dispute is unavoidable.

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Managing risk

MANAGING

In todayâ&#x20AC;&#x2122;s uncertain economic times, managing risk is a fundamental consideration when conducting business. 14

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Managing risk

Now,

more than ever, it is important for professionals to consider how active risk management can both improve the efficiency of their business and help avoid claims arising. At the very least, when claims do occur, risk management initiatives can make firms aware of what is needed to enable insurers or their panel solicitors to deal with such claims. In order to put appropriate procedures in place, it is vital to identify and analyse risks faced by your organisation and implement a coordinated programme to effectively tackle them. This may feel like a significant task to start with, however, this process will positively impact the business by minimising the probability of unfortunate events and safeguarding the resources of the company to make it as secure as it can be.

Equipping employees The main issues can often stem from a lack of attention to appropriate resourcing, such as taking time to ensure that employees within the organisation are not straying into areas outside of their designated expertise. Often, problems can surface where staff are not suitably qualified to undertake certain tasks, yet are expected to provide expertise beyond their capabilities. It is also important to ensure that work levels are as equal as possible across the board, to avoid certain individuals having too much to do or not being properly supported by other members of the team. Left unchecked, this can often lead to mistakes being made. Managers of any business should go to great lengths to ensure that all staff, whatever their qualifications or experience, are properly trained both in relation to the

work they do and in respect of the firm’s own procedures. There needs to be a consistent approach to how tasks are allocated and who is best placed to carry them out.

“

Protecting business As risk management can often be overlooked and dismissed without a real understanding of how implemented procedures can be effective, early legal advice can really assist professionals in how best to protect their businesses.

As professional indemnity lawyers, we manage and tackle claims against professionals every day. As part of this, we are acutely aware of the challenges facing professionals and their businesses. An element of this process includes assessing whether current insurance policies respond to claims, particularly if there is an issue with professionals failing to have proper procedures in place for managing risk. Aside from issues relating to the work itself, this can include personnel being unaware of precisely what their policy covers and also crucially, how to properly notify or make a clam under a professional indemnity policy. The difficulty with risk is that it is ever present. Even when it is clear that an issue has already arisen, professionals may face risks to their professional indemnity insurance cover. Some policies contain “conditions precedent” which means that if a stipulated condition within the policy is not fulfilled then cover can be avoided. Often this relates to when a claim, or even the possibility of a claim, should be notified to the insurers, but can also be used to deter admissions of liability, whether knowingly or otherwise.

As professional indemnity lawyers, we manage and tackle claims against professionals every day. As part of this, we are acutely aware the challenges facing professionals and their businesses

”

We can help professionals minimise risk by offering advice on practical steps that can be taken to manage risk effectively. An essential element of risk We can look at a firm’s management is to ensure that documentation such as terms you understand the limit of indemnity on your policy. If you and conditions and contracts to check that these best suit the have a limited amount of cover needs of the business and help and continue to deal with transactions which are in excess avoid claims arising. You can also consult your firm’s broker of that limit, then this could with any insurance issues, in leave the business liable for the deficit beyond the cover provided particular relating to when and if a claim or potential claim by an insurer. This would be in should be notified. It is always addition to any excess that the preferable to err on the side of business is obliged to meet caution in light of the negative when a claim is paid out. impact of failing to identify Your policy could require you to necessary steps to ensure cover. pay an element of your legal costs as part of your excess or the costs of defending a claim may separately payable by your insurers regardless of how much the excess is. Whatever the financial arrangements of a policy, when a claim is paid out, if the right limit of indemnity is not in place or terms of the policy are breached, this may be the difference between a business surviving and becoming insolvent. This is yet another reason why it is absolutely necessary to understand the terms of a policy.

Understanding your limitations

Find out how our professions and insurance group can help you by getting in touch with Michelle Levin. Call 0845 901 0948 or email michelle.levin@watsonburton.com

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Energising future skills

Newcastle Collegeâ&#x20AC;&#x2122;s Energy Academy is a pioneering centre focusing on innovation, skills development and training for the energy sector

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Energising future skills

Energising future skills Jim Hubbard, Director of the Energy Academy at Newcastle College, explains the reasons behind the creation of a purpose built Energy Academy, which has won national praise for its targeted approach to skills training in the renewable energy sector.

Newcastle

College’s Energy Academy is a pioneering centre focusing on innovation, skills development and training for the energy sector.

It is believed that the UK’s offshore wind and marine energy sector could support 88,000 jobs by 2021, up from around 10,600 at present. A huge increase in the number of available skilled recruits in this sector needs to be trained to meet that demand. We developed the Energy Academy in direct response to the national skills gap and the need for higher level skills and training in regional, national and international renewable energy industries.

Delivering key skills Our academy was officially opened earlier this year, and we are now delivering nationally accredited qualifications and specialist programmes to meet demand from employers, strategic partners and government. These include sector-specific degree level and apprenticeships at all levels, soon to be joined by honours undergraduate and master’s degrees relevant to offshore wind and wind technologies. The Academy is now training engineering, subsea and renewable energy apprentices as well as higher level apprentices, and is providing courses including a foundation degree in renewable energy technologies. There is also a range of welding, fabrication and sustainability courses, and CNC – full five axis training, instrumentation and SCADA programmes.

Open to business We are based on the north bank of the River Tyne, a key location for North East based growth for companies in the renewable energies sector. Businesses, employees and individuals are benefiting from access to all our programmes, which include bespoke courses. We are building strong links with SMEs by responding to their training and research requirements. These include supporting an infrastructure to develop

major components for wind generator assemblies. The 20,000 square feet Energy Academy is also attractive to companies operating in International markets, with proposals for collaborative training ventures already well advanced. Its role as a specialist training hub will boost the chances of further major job creation as the offshore market develops. Our staff work closely with employers, cluster groups, Sector Skills Councils and others in the sector to develop and grow business ideas. Employers have access to the innovative equipment, workshops, incubation facilities and classrooms that can be used to assist with research and development ideas.

Transferable skills The Academy is providing transferable skills training in the engineering and energy sectors to help employers train, retain and recruit highly skilled workers for generations to come. It also offers training for experienced engineers who aim to gain the skills and specialist knowledge required to become project team leaders. These are in growing demand across the offshore energy market.

companies to be part of the burgeoning offshore renewable market. The Energy Academy offers specialist facilities for all its students, including high specification welding bays and electrical workshops equipment, such as a computed numerically controlled (CNC) machine. We have also invested in a wind turbine nacelle and turbine blades to support training in the manufacture, assembly and maintenance of offshore wind turbines.

Bridging the skills gap The size of the Academy means we will have a significant impact on UK-wide skills resource. Our students are already making good use of the six classrooms and Learning Resource Centre, three technical lab size rooms, three enclosed workshops and a large open plan workshop at the Academy. We are also researching provision for other forms of renewable energies technologies to be delivered within the Academy. The possibilities brought by renewable power are huge, but only if the UK can supply the people with the right skills to take advantage of them. The dedicated Energy Academy is playing an important role in attracting investors in the fast-growing offshore energy sector to the UK and the River Tyne, and providing skills development and training to boost the national and international offshore renewable industry.

The Crown Estate has identified three main areas in which there are major skills gaps in the offshore sector. The first is ‘quality engineering’, the second is project managers, and the third is for those who can interpret sea bed surveys. Our offer of engineering, subsea sector skills and higher level sectorspecific courses will help to close the skills gap and create new opportunities for UK

Jim Hubbard, Director of the Energy Academy at Newcastle College

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An energy revolution

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An energy revolution

Last month saw the Department of Energy and Climate Change (DECC) publish the UKâ&#x20AC;&#x2122;s first ever comprehensive Energy Efficiency Strategy. Aimed at kick-starting a groundbreaking transformation in energy for both consumers and businesses, the strategy presents ambitious plans for a low carbon economy. As businesses prepare themselves for implementing new energy saving measures, members of our energy and utilities group answer questions on the framework and its implications for the wider business world.

Panel: Duncan Reid, corporate partner, Sarah Wilson, construction partner, Jacqueline Turner, employment partner and Louise Williamson, utilities manager

Q A

In your opinion, which sector(s) do you think will benefit the most from implementation of the strategy?

Jacqueline Turner: The strategy places an emphasis on driving forward energy efficiency for the public sector. In the long term, the initiatives to be implemented should stimulate national economic growth. The initiatives outlined will take place in two stages. The first will begin with the Government assessing the compatibility of the proposed energy efficiency investments with existing funds within the public sector budgeting framework and publishing guidance as a response to assist organisations across the sector in cutting their energy use. The second phase will see the nationwide rollout of the Government funded project, RE: FIT, which is the Mayor of Londonâ&#x20AC;&#x2122;s award winning programme targeted at improving low carbon initiatives across the sector. These initiatives, if implemented in the correct manner, will both facilitate the public sectorâ&#x20AC;&#x2122;s use of the Energy Services Company (ESCO) market and contribute to substantial financial savings for organisations within the sector.

Duncan Reid: The retail sector looks likely to be impacted by the implementation of the strategy, with high profile industry names such as John Lewis, buying into the proposed energy saving incentives. The national retailer has agreed to work alongside the DECC in introducing a product-labelling trial next year with the aim of demonstrating to customers the lifetime running costs of household appliances. A similar trial undertaken in Norway led to a significant change in purchasing patterns for consumers related to energy efficient goods. It is likely that once the trial is completed in the UK that the same changes will occur here and retailers will need to respond to consumer needs in the appropriate manner in order to retain market share. We are already seeing large international retailers addressing the issue of energy efficiency, with the most recent example, IKEA, announcing plans to use 100% clean energy by 2020.

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An energy revolution

Sarah Wilson: As a professional specialising in the construction sector, I can see that house building will experience some changes as the focus turns towards the creation of eco-friendly homes. Through initiatives such as the Green Deal and Feed in Tariffs (FiTs), house owners have become a major target for the Governmentâ&#x20AC;&#x2122;s energy efficiency schemes and house builders are increasing pressure to provide sustainable environments via renewable energy solutions. For our clients operating within the sector, this means changing the way in which houses are built, reflecting on how materials are sourced, reviewing electricity requirements and providing creative solutions with the aim of reducing water usage. The sector has a lot to offer in assisting the Government with its aim of reducing the UKâ&#x20AC;&#x2122;s carbon emissions by 80% by 2050. Louise Williamson: Major issues for both consumers and businesses are high energy costs and carbon emissions and currently there is very little guidance to assist in reducing either. The strategy is attempting to tackle this by making funding available to increase the proportion of facilities managers receiving specialist energy efficiency training in businesses across the country. In doing so utility companies will see benefit from working with clients who have a greater understanding of the service provided. From our experience in working alongside energy providers, we have found that they have already developed initiatives aimed at producing a low carbon economy, such as undertaking research and development to help deliver low carbon electricity distribution system through Smart Grid Projects.

The Governmentâ&#x20AC;&#x2122;s aim to create jobs and provide cost effective energy solutions is a significant step forward in helping to establish the UK as a hub of energy efficiency 20

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An energy revolution

Q A

The Energy efficiency strategy includes plans to save 22 power stations worth of energy by 2020; do you think implementation of this framework will assist the Government in meeting this target?

Duncan Reid: The Government’s aim to create jobs and provide cost effective energy solutions is a significant step forward in helping to establish the UK as a hub of energy efficiency. However, the cost implications are something that needs continuous monitoring. An element of the strategy outlines details of a £39 million cash injection to fund five centres examining business and household energy and demand. If utilised correctly in the given timescales then this aspect of the strategy will be invaluable to the UK. Whether this is achievable remains to be seen.

Louise Williamson: At this point in time, it is difficult to say. Both public and private sector organisations still face stringent limitations in terms of allocating their budget and initiating energy incentives within an organisation can often prove to be expensive.

Sarah Wilson: Accomplishing this target would be a great achievement. However, the DECC openly acknowledges that there are a number of barriers to overcome before this can become a reality. Misaligned financial incentives and behavioural ideology are what the Government describes as two of the main barriers to energy efficiency and until these are dealt with in an appropriate manner (as outlined in the strategy) then achieving the target will prove difficult. Jacqueline Turner: As long at the Government continues its endeavours in educating businesses in relation to the benefits of energy efficiency then there must be the possibility that the target will be achieved.

The aim of the strategy is to primarily stimulate energy efficiency and boost economic growth in the UK

Q A

What are the commercial implications of the Strategy for the firm’s clients?

Sarah Wilson: Out of a total 27 million homes across Britain, research by the DECC shows that 14 million are not properly insulated with a high proportion built before the end of World War II. As a result, there is a large demand for buildings, both domestic and commercial, which are both sustainable and eco friendly. This in itself creates both commercial challenges and opportunities for our clients, with businesses across the full supply chain feeling the effect of new energy initiatives.

Jacqueline Turner: The energy efficiency sector in the UK already accounts for 136,000 jobs and in 2010 / 2011, produced sales of approximately £17.6 billion. The aim of the strategy is to primarily stimulate energy efficiency and boost economic growth in the UK. This has the potential to result in the creation of employment opportunities in the sector as well as to reduce running costs for businesses across the board, thereby increasing productivity. Louise Williamson: The strategy contains the Government’s Electricity Demand Reduction project, which is set to have a significant impact on utility providers across the UK. Initiated in July 2011, in response to a commitment in the Electricity Market

Reform White Paper, the programme assessed whether there is sufficient support and incentives to make efficiency improvements in electricity usage and ascertain whether there is a need for appropriate additional measures. This assessment concluded by confirming that there is significant potential for greater efficiency in the use of electricity in the UK. Since then, initiatives such as the Renewable Heat Incentive (RHI), FiTs and Smart Meters have been implemented and will work alongside the Green Deal supporting the expansion of energy saving measures in organisations of all shapes and sizes. Duncan Reid: The Government envisions that implementation of this strategy will provide the opportunity for British businesses to develop expertise which can be exported to overseas markets. The DECC states that early adopters of energy saving measures are already receiving international recognition for their approach, citing Arup as an example, who is currently undertaking an energy efficiency audit on university campuses in USA. With this in mind, there is a great potential for businesses across all sectors to seize the opportunity to enter new markets and demonstrate their specialist expertise on a wider scale.

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Bringing new life to old land

Bringing new life to old land Miller Argent is a 50-50 joint venture between the Miller Group Limited, the UKâ&#x20AC;&#x2122;s largest privately owned housebuilding, construction and property development company, and Argent Group plc, a leading London based development company which specialises in major urban regeneration schemes, including Kings Cross Central, London and Brindley Place, Birmingham. 22

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Bringing new life to old land

James Poyner, director of Miller Argent, discusses the largest reclamation project the company has undertaken to date (the Ffos-y-fran Land Reclamation Scheme), and its ambitious plans for the future.

Growing

demand from economies worldwide, particularly in emerging countries, has led to a sustained increase in the worldwide demand for coal over the last decade. As a result, an increasing number surface mine sites have become commercially viable, which has provided the UK surface coal mining industry with a major opportunity to maintain and in places increase activity and output. The UK opencast sector directly employs more than 2,500 full time workers. As well as helping to drive economic growth and achieving energy security in the UK, the land reclamation which is an integral part of surface mining projects can bring back huge swathes of land which were formerly derelict and under-used.

Ffos-y-fran is the largest land reclamation scheme of its type in Western Europe. It is a 17-year project in Merthyr Tydfil, South Wales in which we are reclaiming over 1,000 acres of unstable and derelict land. Ffos-y-fran is, in essence, the third and final phase of the original East Merthyr Reclamation Scheme which was conceived and developed by the local Councils. We have been working on this project since 1996 and actually commenced site operations in 2007. We expect to recover over 11 million tonnes of Welsh dry steam coal over the life of the c. ÂŁ800 million scheme. Our restoration strategy aims to restore the land to a landscape that recreates its characteristics before industry came to the area.

To do this we first had to clear 350 thousand tonnes of non-inert material from three, potentially hazardous redundant rubbish tips located on the site.

Investing for future value We devised our restoration strategy not only to reclaim the derelict land and deal with its problems, but also to make the land productive again before returning it to Urban Common. A large proportion of the 1000 acres of land was derelict, and restoring it all without extracting coal would have cost more than ÂŁ130 million. As well as the three unsightly and hazardous landfill tips, the site was also home to abandoned vehicles, dangerous chartered and uncharted mine shafts and adits â&#x20AC;&#x201C; underground mine entrances.

Aerial shot of Ffos-y-fran

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Bringing new life to old land

â&#x20AC;&#x153;

As well as helping to drive economic growth and achieving energy security in the UK, the land reclamation which is an integral part of surface mining projects can bring back huge swathes of land which were formerly derelict and under-used

â&#x20AC;?

Aerial shot of Ffos-y-fran

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Bringing new life to old land

Expert team We have a team of specialists working with us, including a full time archaeologist, working with a team we employed from the Glamorgan-Gwent Archaeological Trust to carry out all the main archaeological works on site. Archaeological features protected during operations, such as the Scheduled Ancient Monument known as Sarn Howell Pond and elements of the Dowlais Free Drainage System, the wooden aqueduct over the disused railway line that is a listed building and the recently discovered Iron Age Settlement, would also be incorporated into the restoration strategy with suitable management being afforded to protect and preserve these features throughout the period of aftercare. The dedicated site team also includes mining engineers, environmental managers and up to 15 specialist consultants in areas including ecology, hydrology, hydrogeology and air quality etc. The Ffos-y-fran project creates employment for in excess of 200 people altogether, but indirectly maintains and provides employment for up to 400 additional jobs in support activities throughout the scheme.

Environmental focus We pride ourselves on our rigorous environmental policies and procedures, and have gained the high industry environmental

standard BSEN ISO 14001. The environmental monitoring we carry out routinely includes constantly monitoring the water quality, noise, dust, air quality and vibration levels. Our environmental manager is involved with wider management plans for the ecological area, monitoring the Great Crested Newt population and Lapwing nesting areas and many other ecological features. We have safeguarded the ecological area at Ffos-y-fran which contains newts and many bird species, and an ancient wooded valley which also contains diverse wildlife. Our support ranges from putting up a number of bird and bat boxes, and initiating a tree planting scheme. Over a thousand trees have already been planted and further tree planting will continue every year of the project. Care for the environment is one of our primary corporate responsibilities and we are fully committed to improving standards of environmental management on all our projects. We aim to minimise waste, prevent pollution, and pursue good practice in resource management, and set targets and use plans to monitor the achievement of environmental objectives. Each employee is expected to prioritise environmental considerations, and all our staff are provided with environmental education and training.

in South Wales, at the neighbouring Nant Llesg site. This will involve an 11-year excavation resulting in the recovery of up to six million tonnes of coal, creating around 300 jobs in the region. Most of the coal produced at Nant Llesg would be transported to Aberthaw Power Station in the Vale of Glamorgan and to the Tata Steelworks at Port Talbot. Having a source of local coal significantly reduces our reliance on imports from other parts of the world and increases Walesâ&#x20AC;&#x2122; energy security. While recognising the great importance of reducing carbon emissions through renewable energy, Nant Llesg would play a vital role in addressing the energy gap we face in Wales. It is an important job creator which will, like Ffos-y-fran, result in long-term improvements to the area.

Nant Llesg The Miller Argent team is now preparing a planning application for another major project

James Poyner, director of Miller Argent

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In the frame?

In the frame? The use of Framework Agreements has continued to generate much debate in the construction and engineering industries, with prominent political and industry figures voicing widening concerns over their application.

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In the frame?

“

An organisation’s viewpoint on Framework Agreements is dependent on which part of the framework the business is positioned, or not, as the case may be

Ask

the operators of a major Framework Agreement to define what it is, and a typical response may be: “It’s an essentially facilitative document that provides a mechanism for one party to place orders with the other on standard terms over a period of time.” Ask an SME construction organisation in today’s recession hit market and the response would most likely be quite different: “Frameworks appear to reward only the larger organisations, who are often based outside the framework region (or country), and once appointed prevent any other legitimately worthy organisation from tendering for the work for a substantial period”. An organisation’s viewpoint on Framework Agreements is dependent on which part of the framework the business is positioned, or not, as the case may be.

The benefits and beneficiaries There are various reasons why Framework Agreements are implemented and arguments for their use can include: • They facilitate similar transactions. Agreeing standard terms and conditions and processes make it easier and faster and therefore cheaper to reach agreements where contracting parties enter into a series of similar transactions in the future. • They provide consistency and produce benefit from economies of scale. • Where a party (who is subject to the public procurement rules) is contemplating a series of similar transactions, the procurement of a single Framework Agreement covering all the potential transactions is an extremely attractive alternative to continuous procurements. The transactional cost of multiple procurements is a key concern to those involved in the public sector and a Framework Agreement can reduce these costs and provide commercial certainty (if drafted properly).

Public sector procurement The National Audit Office (NAO) recently reported that Government guidance to the public sector is that Framework Agreements

”

have the potential to create a reduction in capital expenditure and process efficiencies of up to 10%. The Yorkshire based “Construction Sector Network” has indicated that following a survey of SMEs and micro-contractors, they found that frameworks were in fact creating significant barriers to winning contracts. The concern with Framework Agreements on a regional scale is the potential implication for the local supply chain. This can have a serious adverse effect if local suppliers are excluded in favour of larger non-regional companies, largely owing to an inability to fulfil the requirements of what is perceived to be (by SMEs and micro-contractors) an unfairly drafted Pre-Qualification Questionnaire (“PQQ”) or tender process. Indeed, the Federation of Small Businesses has indicated that SMEs only win around 2% of the public sector’s annual business in the UK, even though SMEs account for more than 50% of Britain’s GDP. This means that the structure and PQQ process for Framework Agreements will need to change if SMEs are to be considered equally as a framework suppliers alongside their larger competitors.

Private Sector Procurement

Such dual approach to procurement obviously benefits the framework employer, but perhaps the existing framework supplier who has gone through a detailed and cost discounting prequalification process may be left a little confused.

Frameworks of the future Given the sheer volume, reliance and current duration of existing Framework Agreements in the UK, this method of procurement will not.disappear in the foreseeable future. More likely, the pressures on Government and the private sector to make frameworks more inclusive to SME's will hopefully result in some change in PQQ structure and tender evaluation. Doing so may allow other worthy participants in the industry a chance at obtaining valuable work in a tough economic climate. In addition, the use of statutory measures such as the Infrastructure (Financial Assistance) Bill 2012-2013, which proposes to guarantee up to £40bn of investment in infrastructure and up to £10bn in new homes, may help struggling SMEs to balance the work which they are currently missing out on under current Framework Agreements, although we shall have to wait until next year to assess the impact of this.

Leading UK retailers and supermarkets have recently indicated that in such tough competitive times, solely using Framework Agreements might not be the right method of procurement and that a shake-up of the procurement process may be required. So, what are these retailers and supermarkets wanting that a framework arrangement does not provide? Well, they are predictably looking for key savings, but are also looking for better organisation in supply chains, better management of materials and slicker logistics. Would this then mean “off-panel” work? (possibly, but subject to exclusivity and providing that the proposals provided are innovative and ultimately cost effective).

Find out how our construction group can help you by getting in touch with Andrew Poyner. Call 0845 901 2070 or email andrew.poyner@watsonburton.com

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Building a story of growth

BUILDING

A STORY

OF GROWTH Gerry Choat, Managing Director (North East) of Story Homes looks at the major challenges facing the UK’s housing industry post-recession.

The

slump in the UK’s housing activity over the last few years has intensified the economic downturn. The CBI believes it accounts for a third of the overall drop in GDP during the recession. Boosting activity in the housing and construction sectors could help to drive the UK’s recovery and lead to sustainable, longterm solutions for a healthy housing market. One of our company’s real strengths is its strategically acquired land bank, which includes sites from Scotland to Lancashire. This land bank has grown a great deal in the last five years while conditions favoured acquisitions. We’re moving south, with land bought from the Homes and Communities Agency at Lancaster Hospital, Lancashire which is about to be developed, and north, with an 800 units scheme underway in Dumfries.

We’re planning to expand our housing developments over the next four to five years. Story Homes has the experience to understand where the opportunities are and we do our research in depth before making significant investments. Story’s decision to move into house building in the North East began with strategic land acquisitions followed by the recent opening of its 240 unit scheme at Shotley Bridge. This site was also acquired from the Homes and Communities Agency who required a high standard of design and energy efficiency as part of the development proposal. At the moment Story Homes, with its base in Carlisle, is building about 150 houses a year and we aim to double that in each of the next three years through geographic expansion.

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Building a story of growth

Shotley Bridge development

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Building a story of growth

Shotley Bridge development

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Building a story of growth

The slump in the UK’s housing activity over the last few years has intensified the economic downturn

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KICK-START UK HOUSING MARKET

We need action to kick-start the house building industry across the UK. The number of new properties being started this year has fallen to a three-year low. Capital spending by the public sector is dropping, and capital investment by private sector companies is needed to fill a growing gap. There has to be a steady pipeline of new housing supply combined with sustainable demand to bring about stability and longerterm economic health in the housing market. The new attitude from government, which says it’s committed to “getting Britain building again”, could help to change the culture postrecession. The government’s housing strategy aims to unlock the housing market and stimulate the construction industry. It includes a £400m Get Britain Building pot to support new development and 'build now, pay later' deals for public land. North East regeneration, however, will require significant investment from private sector companies and swift, positive responses from planning authorities to bring back some of the lost momentum. A presumption in favour of sustainable development needs to be the norm in practice before we will see major change taking place.

CULTURAL CHANGE

GROWTH AND JOBS

However, there’s a hopeful glimpse of a cultural change in local authority forward-planning making an appearance. Local authorities seem to be coming to terms with the new economic reality of limited public funds and a need to encourage private investment. Allocating housing land in high demand areas, where people actually want to live, is becoming more commonplace across the region.

New housing is a potential source of much needed economic growth and jobs, which offer any region a competitive edge for inward investment. It was interesting to see that Middlesbrough over-rode objections to a number of housing schemes at the end of 2011 because of its ambitions for the wider economy.

Recognition of the fact that many of the housing regeneration projects favoured by local authorities, although highly laudable, are simply not financially viable without significant public subsidy. Councils are also waking-up to the opportunity for the planning gain requirements from the poplar private housing schemes being used to crosssubsidise the regeneration schemes. This new way of working is a process which Story Homes fully understands and is happy to engage in a partnership arrangement with local authorities. This change in strategic thinking within the public sector has also been accompanied by the promotion of localism. The localism agenda is often interpreted as a way in which to stop or control things happening in an area, but it should also be there to enable much more progress to be put in place. Once the principle of development has been established through the planning system, its delivery should be influenced by the local community, but not stopped. The ambiguity at the heart of localism plays out through planning applications, when local politicians can feel they’re under pressure to say no to new developments from some residents. The growing impact of social media and lobbyists mean that such pressure is felt all the more keenly, round the clock.

Durham County Council is also being bold in its aspirations for economic growth, focusing investment in attractive market areas to increase the impact and effectiveness of strategic developments. Its local plan, like all others in the region, has investment as a key priority. Story Homes has continued to do business through three economic downturns, and the new North East base has the ability to be fleet of foot, with strengths in decision making and local control that underpin successful building and business strategies. Our land bank means that we have the ability to build on our presence in the region relatively quickly. Good quality houses in well-thought out locations are attractive not only to house buyers but also to business and industry investors. A good quality of life is an important asset, and is reflected in the choice of housing, leisure and landscape in an area. We intend to boost competitive advantages through future Story developments in the North East, Cumbria, Lancashire and Scotland.

Gerry Choat, Managing Director (North East) of Story Homes

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Planning for sustainable growth

Planning for sustainable growth Earlier this year the Coalition Government published its long awaited National Planning Policy Framework (NPPF) as part of its proposed radical reform of the UK’s planning system. The policy, which aims to “protect the environment and promote sustainable growth”, has caused much debate across the industry, with many professionals voicing concerns over the future of regeneration and affordable housing.

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Planning for sustainable growth

Despite

recent pronouncements of a slight rise in GDP during the last quarter, the plight of the construction and housing industry is yet to benefit from the raft of central Government proposals and initiatives recently brought into play. As a result, recent Government pronouncements have foreshadowed further changes to the planning system which appears to be seen as the block on development potential - be it housebuilding or the provision of much needed national infrastructure.

Growth and Infrastructure Bill The recent publication of the Growth and Infrastructure Bill contains a further tranche of prospective changes to the planning system. In many ways the proposals appear to be in direct opposition to the provisions contained in the Localism Act recently passed in 2011. For example, the Community Right to List Assets and the provisions with regard to the bringing into force neighbourhood plans (which have already been brought into force). It seems likely that the present and proposed planning changes will run counter to the spirit (if not some of the actual provisions) of the Localism Act. Proposals in the new bill include the option of making planning applications directly to the Secretary of State where a local planning authority has been designated. The intention here is to designate those authorities that have a poor record of performance, with a view to avoiding delays in obtaining planning permissions from local authorities for much needed development proposals. This would not appear to follow the Government’s intentions to devolve development decision making to a neighbourhood level, but instead seems to foster the impression that the Government intends to wrest the most important decisions away from local areas and put it back into the hands of central Government.

Other proposals contained in the new bill cover: • the broadening of the powers of the Secretary of State toward costs in planning appeals • the limits that are to be imposed on the amount of accompanying information required by a local planning authority when planning applications are made • provisions for the reconsideration of economically unviable affordable housing requirements contained in Section 106 Agreements • excluding the right of local groups to apply for town or village green status of land earmarked for proposed development. The bill additionally contains provisions which would allow the Secretary of State to allow certain business and commercial projects of national significance to be considered under the nationally significant infrastructure regime contained in the Planning Act 2008. This is to enable those schemes to proceed faster than at present, with the Government speeding up the processes for holders of consents under Section 36 of the Electricity Asset 1999. This entails categorising them in the same position as holders of development consent orders made under the 2008 Act.

Planning for change It remains to be seen whether these measures will result in an increase in the number of planning applications being made for development proposals so that the construction industry can again begin to contribute to a rise in GDP. Another consideration is whether the underlying reason for its malaise still resides in the lack of available finance on offer to the general public and SMEs in the form of easily obtainable mortgages and business loans, which would inevitably allow capital injection into projects for growth to be commenced. One thing is for sure, there will be a backlash from those opposed to development projects, such as perceived invasive road schemes and environmentally unfriendly onshore wind farms. The rise in local protest groups is already being seen and a return to planning permissions being obtained by way of appeal (and a reappearance of “Swampy”) may be not far away.

Find out how our planning team can help you by getting in touch with Bryan Riley. Call 0845 901 2071 or email bryan.riley@watsonburton.com

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Hedging Claims: Is now the time to act?

Hedging Claims: Is now the time to act? Banks have offered hedging products for many years. From 2006 there was an apparent change in the approach to the sale of such products in terms of the number sold and the range of customers they were sold to. In the most common form of such products the “hedge” was linked to interest rates. The theory was that such products provided a degree of interest rate protection for the customer by setting a ‘ceiling’ for the rate that the customer would pay.

Recent

investigations by the Financial Services Authority (FSA) suggest that whilst banks made much of the virtues of hedging as a means of protecting against interest rate rises, little focus was given to what would happen if rates went down. This was a concerning omission as a number of these products included a floor below which customers would not benefit from interest rate falls. The credit crunch of 2007/8 and the consequent collapse of bank base rates has led to a number of customers being significantly worse off as a consequence of having entered into hedging product. In a number of instances customers were obliged to take out the hedging product as a condition of banks providing loans. This issue has been compounded by the fact that many customers who have attempted to break the hedge (i.e. cancel such products) have found that the costs of doing so is prohibitively expensive and were unaware of such costs until attempting to cancel. As a result, a number of customers are now looking to the Financial Services Ombudsman and / or the Courts for redress. At the moment very few cases have made it to court and as a consequence there

remains a deal of uncertainty about the obligations owed by the banks to their customers and the extent to which those obligations have been breached.

Reasons to act now Whilst the law in this area is still developing there a combination of factors means that if customers are considering taking action in relation to hedging issues, they would be well advised to act fast. The first is the limitation period; depending on the circumstances it may well be that a customer would only have 6 years to commence proceedings from the date the product was entered into or the chance to claim may be lost. If the sale was in the period of 2006 to 2008 timing is likely to be critical (although there are circumstances in which the limitation period may be extended and/or run from a date later than that of the agreement). The second reason to consider acting now is that banks may be more willing to consider settling claims in the early stages before the law develops. Once the Courts have given authoritative rulings the risks

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Hedging Claims: Is now the time to act?

“

Recent investigations by the Financial Services Authority suggest that whilst banks made much of the virtues of hedging as a means of protecting against interest rate rises, little focus was given to what would happen if rates went down

”

faced by the banks will become clearer and they are more likely to take a robust view in relation to claims they consider to be “borderline”. The third reason to consider acting now relates to After the Event Insurance (ATE Insurance). In general terms ATE insurance provides that if a party who has insurance loses the litigation, the policy pays the other side’s costs (which would otherwise be payable by the losing party) and no premium is payable by the losing party. If the party with insurance wins, the premium is recoverable from the other party as a cost of the litigation (subject to an argument about the reasonableness of the premium). This position is due to change as from 1 April 2013 as ATE insurance premiums will no longer be recoverable as a cost of the litigation (subject to limited exceptions). As the banks have lined up a roster of expensive city firms to defend them the potential costs downside if a claim fails is very significant. Post 1 April 2013, the insurance premium to protect against exposure to such a costs downside will no longer be recoverable. This shift in the balance of power as regards costs recovery is likely to provide the Banks with a significant tactical advantage.

Timely advice Our team has experience of advising on a number of misspelling claims. Our first step in advising clients is consider if the product has been missold and the basis any claim (addressing issues such as any attempted exclusion of liability by the bank). This stage would also involve a review of the position in relation to limitation. It might be that your claim is better progressed via the Financial Services Ombudsman, with limited input from lawyers. However, if the claim is likely to worth more than £150,000 it may fall outside the scope of the Ombudsman scheme and formal legal proceedings, or at least the threat of them, might be required. Our intention is always to give clients accurate, commercial and timely advice. If a claim can be settled on reasonable terms without the need for litigation that makes sense. If settlement pre-issue is not possible we can advise on options for litigation, including the issues of funding and costs protection. This would include considering ATE insurance. Not all customers who have been sold hedging products will have viable claims and those customers who have claims need not pursue them. However, now is the time to consider whether you have a claim and take appropriate expert advice.

Find out how our commercial litigation team can help you by getting in touch with Andrew Johnson. Call 0845 901 0911 or email andrew.johnson@watsonburton.com

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PRIME POSITIONING

Prime positioning

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Prime positioning

IN THE SECOND IN A SERIES OF ARTICLES ON THE FIRM’S FIVE STRATEGIC PRIORITIES, CHIEF EXECUTIVE OFFICER, PATRICK HARWOOD, EXPLAINS THE VALUE OF MARKET POSITIONING IN HELPING WATSON BURTON ACHIEVE ITS STATUS AS A PREMIER COMMERCIAL PRACTICE OF NATIONAL SIGNIFICANCE.

FOR

any business operating in professional services, the formation of a clearly defined corporate identity is pivotal to its success. A progressive vision, combined with a consistent internal and external representation of an organisation, signals triumph for companies and clients alike and is what we strive to achieve on a daily basis. Our positioning within the sectors in which we operate forms an essential element of Watson Burton’s national brand. By working in conjunction with our four other identified key strategies – our clients, our people, our common purpose and our new start – the firm is able to strengthen its position to demonstrate our continuous commitment to delivering quality in all that we do for our growing national client base.

BUILDING LASTING RELATIONSHIPS

ability required to provide practical business solutions, but also the high level commercial awareness of business management to produce the best possible results. This is underpinned by regular review meetings to guarantee that each stage of the relationship has both strategic direction and an affinity for meeting the business objectives of our clients. To date, our flexible, client orientated approach to the development of lasting relationships has produced outstanding results for our clients. This year alone, our talented lawyers have advised Springfield Healthcare Group and Wear Inns in securing multi-million pound investments to aid their expansion plans, our employment lawyers have become the first in the country to successfully challenge TUPE regulations in relation to outsourcing of services and we have saved a Wolverhampton-based client more than a quarter of a million pounds by successfully appealing against an Office of Fair Trading (OFT) penalty.

INVESTMENT FOR GROWTH Within the fast-changing sectors that we work in, we pride ourselves in being pro-active in dealing with problems before they arise and strongly believe that a heightened awareness of our clients’ business and the marketplace is key to our sustainability and future growth. This year has seen the firm gain momentum with the appointment of over 25 new employees, who all have a crucial role to play in maintaining the core identity of Watson Burton. From our offices in Newcastle, Leeds and London we are positioned to deliver national level expertise at regional rates, with a physical presence that meets the needs of national clients. Our recruitment programme has seen the firm inject new vitality into our service offering in Newcastle and Leeds. With three centuries of history in the North East, our firm is a passionate supporter of stimulating economic prosperity in the region and is committed to doing all that we can to assist local businesses in their endeavours. You will see from page 4 of this publication that the regional agency, NewcastleGateshead Initiative has some fantastic plans for attracting inward investment into the region and we take great pleasure in assisting them to highlight the North East as a hub of high quality business transactions worthy of national recognition. As a firm, we are extremely excited about our rejuvenated team operating from our Leeds office. The appointments of lawyers such as Andrew Johnson, Joanne Sears, Andrew Poyner, Michelle Levin and Andrew Francey complements our existing service to the Yorkshire market and adds a new dimension to our exemplary team. Over the next year, our dedicated team will continue to work hard to build upon the foundations created in the region for the ongoing success of our clients.

POSITIONED FOR SUCCESS Our main aim in positioning the firm is to ensure that when clients are asked to describe their impressions of Watson Burton, they respond with phrases such as “client focussed”, “commercially astute” and “understand our goals and aspirations.”

As a dynamic, forward thinking commercial entity, we cultivate a clear-sighted approach to building strong long-term client relationships, a notion which lies at the heart of our business strategy. Our team recognise that the needs of our clients’ continue to change in line with the political, social and economic demands of the marketplace and we work hard to ensure that the service we provide is flexible in meeting their ever changing legal and commercial requirements.

These successes offer only a small sample of the excellent work undertaken by our lawyers and visibly express our ongoing obligation to enhancing the businesses who we work with. To this end, we endeavour to create successful, cost effective working relationships, based on a mutual trust and deep understanding of the needs of our clients’ businesses and the wider marketplace.

Our mission is to develop productive partnerships with national organisations. As a result, we hand pick a core team of lawyers for each client with the aim of presenting individuals that not only have the technical

Find out how Watson Burton can help your business by getting in touch with Patrick Harwood. Call 0845 901 2091 or send an email to patrick.harwood@watsonburton.com

In creating and maintaining our market position, we place our clients at the core of everything that we do and recognise that without them we would not exist. We are proud to say that we have a distinct corporate identity – we know who we are, understand our clients and are positioned for national growth. This, in itself will make great strides in helping us achieve our vision of being a national firm of quality.

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An enlightening partnership

Watson Burtonâ&#x20AC;&#x2122;s approach to supporting community initiatives is underpinned by a passion for celebrating arts and culture, which has this year led to the firm partnering with Tyne & Wear Archives & Museums (TWAM) to further promote its nationally recognised collections.

Left to Right: Gillian Hall and Carolyn Ball at The Discovery Museum

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An enlightening partnership

our role as corporate partner with TWAM, we aim to encourage and inspire creativity within the community in which we live and work. We believe that the collections of international significance in archives, art, science and technology, archaeology, military, social history, fashion and natural sciences do that and more, providing valuable learning resources to the region that has a positive impact on the lives of individuals.

Some of the 12 museums and galleries owned by TWAM are monumental landmarks in the region, with both Discovery Museum and the Great North Museum recognisable in the city centre skyline of Newcastle. They also boast some world-class collections which have been awarded designated status by the Department for Culture, Media and Sport in recognition of their national importance.

Innovation A core element of our partnership is a mutual understanding and belief in the importance of art and culture and its effect on wider society. To us, the work undertaken by TWAM promotes the region as a leading centre for culture and diversity and personifies innovation in all that it does. As a national law firm with a 200 year history in the North East, we pride ourselves on our ability to offer support to modern day pioneers. Over the years, we have provided legal services to some outstanding innovators across the centuries, from Joseph Swan in the 1800s to a range of 21st century technology pioneers. TWAM has in fact captured elements of our history within its collections, displaying Joseph Swan’s drawings and first light bulbs in the Discovery Museum. Joseph Swan selected Watson Burton to advise him on the patent protection of his carbon filament light bulb in the 19th century. Swan was the inventor of the electric light bulb, patenting his a year before Thomas Edison, and his Gateshead house was the first in the world to have working light bulbs installed. His patent led to the creation of products which have changed home and business life through-out the world. Gillian Hall, Senior Partner at Watson Burton, said: “The TWAM collections are an important part of the region’s heritage and has international significance. “Joseph Swan was one of 19th century’s most notable inventors. His creativity has made a significant difference to how we all lead our lives today. We are very proud of the

fact that Watson Burton played a part in this groundbreaking work. We are also grateful that institutions like TWAM are there to educate the region’s next generation of innovators by giving them access to the North East’s great history.” Carolyn Ball, Archives and Records Services Manager at Tyne & Wear Archives & Museums,

said: “In the current financial climate, it can be difficult for organisations such as ours to obtain the relevant support and funding, so we are extremely grateful for corporate partners such as Watson Burton. One of our main objectives is to make a positive impact on people’s lives and we strongly believe that we do that.”

The TWAM collections are an important part of the region’s heritage and has international significance For further information on the services provided by Tyne & Wear Archives & Museums, visit their website http://www.twmuseums.org.uk/

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