Developing Consensus Submission to Association of North East Councils.
Task and Finish Theme: Promotion and Inward Investment
Developing Consensus represents the region’s leading property investors, developers and professional advisors.
The group is working to address some of the some of the most pressing issues facing the Greater Newcastle City Region, specifically regarding stimulating the economy around the built environment.
Over the last 10 years Developing Consensus members have invested over £750m into the North East Economy and have been responsible for the delivery of the most significant developments.
Working together to attract inward investment, Developing Consensus is looking to support the LEP, individual councils and NGI, and promoting a single, strong and compelling message to attract new business to Greater Newcastle.
Delivering commercially viable development schemes through a streamlined process from planning to construction and occupation.
In both areas, the overriding aim is to see more collaboration and a joined up approach spanning public and private sectors.
Developing Consensus has held two events; a conference in Newcastle in June 2012 attended by almost 150 property professionals and a workshop in September focused on Inward Investment.
The contents of this submission are formed from the discussions at both events which have been recorded and can be shared in full. This includs a volume of evidence of the experience of members dealing with Inward Investment to the North East. This evidence is attached as an appendix to this submission.
Developing Consensus are keen to work with the LEP, the various councils and ANEC to support both Inward Investment and wider issues related to the built environment including strategic planning and Infrastructure.
For More information on Developing Consensus and a list of our members, please visit www.developingconsensus.co.uk
Growing the Economy
The North East needs to deliver a rate of economic growth and job creation beyond what can be grown from the existing North East private sector. Organic growth is very important, but to create the jobs and economy we need, we must also attract a significant amount of new investment to the region.
Economic Development and Inward Investment
Business does not see Local Authority boundaries but sees either City Regions (comparable to Leeds, Manchester, Glasgow etc) or larger geographical regions ie North East, West Midlands etc.
It is important to coordinate work across council boundaries and to speak as a single voice across a wider geography with a clear message that is easily understood.
In our view the geography should be the seven councils that make up the North East LEP.
Some Inward Investment comes via UKTI but the majority comes either direct or via private sector consultants. It is important to cover the full range of the Inward Investment market.
For inward investment, it is important to have a structure in place that can act as a single point of contact covering the full geography. Both to push out positive messages across a range of demographic data ranges and also to receive enquiries. This will be to support inward investors, provide information and to arrange and accompany visits to the region.
The more streamlined the process, the more professional and businesslike we are perceived to be as a region, and the more likely an inward investor is to engage. It is hugely damaging if we are seen as divided and disjointed.
The competition is very strong as peer group comparison shows. We need to look at the leadership and governance structures in place in competing locations and ensure that we are structured to enable the joint up approach we need.
Branding is important to position ourselves at the right level. Many projects work from a long list of four to six locations. We consider that once on the long list, there is a strong business case, however if we are not on the long list then we are ‘out of the game’ before it has even begun. A strong, single brand supported by a single message as per the previous ‘passionate’ campaign is needed to join the various strands of our offer across the region.
The sector targeting approach should be realistic given availability of skills and workforce. This should be balanced by also covering other sectors (ie service and financial) which are sometimes of lower economic value, but where existing skills exist and can create significant numbers of new jobs.
Notes from Developing Consensus workshop held at Ryder, Cooper’s Studios, Newcastle on 28th September 2012.
The purpose of the meeting was to collate both good and bad experience of Inward Investment activities in the North East as experienced by the members of Developing Consensus. The meeting was attended by a cross section of Developing Consensus members including Developers, Surveyors, Architects and Solicitors.
The report provides;
1.0 Good Examples of Inward Investment
2.0 Bad Examples of Inward Investment
3.0 Peer Comparison
It is hoped that the experiences of the Developing Consensus members and the views of the group will be helpful to those bodies and organisations tasked with looking at growing Inward Investment into the region.
1.0 Good Examples
1.1 Northern Development Company (NDC)
- There was a consensus that the NDC was a very useful organisation
- The NDC had offices in the Middle East and Far East which were fighting for the North East
- It incorporated a blend of sectors and skills
- This should be replicated.
1.2 Crown Plaza Hotel
- It took the opportunism of individuals in the private sector to bring this investment to the region
- Certain individuals went to Germany to meet with the directors of Lever Cranes, and made a personal connection with representatives of the company
- This should be replicated both in the public and private sector
1.3 Crown Plaza Hotel
- Silverlink Group approached Crown Plaza rather than being re-active and waiting for a potential investor to approach them
- They approached several investors, on the basis that if the Crown Plaza deal fell over there would be an alternative investor in waiting
1.4 Tyne and Wear Development Company (Twedco)
- Twedco was praised as an effective point of contact which covered all the Local Authorities and provided an information base
- It was successful because it marketed itself as being on the side of the investor
- It was independently funded by rents from properties which Twedco itself owned
- It was a small team of six and therefore an accountable body
- Twedco was praised for attracting Insurethebox and London & Country to the region
- There was a consensus that Twedco should be recreated using the same people and the same intellectual property
- It was suggested that this organisation be combined with the County Durham Development Organisation and ARCH covering Northumberland.
- Northumberland County Council was credited as being excellent in their support of this investor
- They understood the need to get the planning agreed and handled effectively
- The Planning Committee was able to meet within 11 weeks.
- The region came very close to securing investment from Hoxton Hotel Group
- The reason Hoxton Hotel Group considered investing in the region was because individuals from the private sector made a personal contact with representatives from Hoxton Hotel Group, and found out their exact requirements
- This demonstrates that the region should morph itself to meet the requirements of potential investors, rather than remaining static.
2.0 Bad Examples
2.1 One North East
- Too may people employed, unable to achieve its goals
- They had no clear remit. Waste of funding.
- Failed to see the economic benefit of business parks, refused multiple invitations to the opening of such business parks
- Disconnected with the sectors that were growing in the region.
- There was no united response from the local authorities, no decision about where the investment should be.
- The local authorities made assumptions about what Hitachi’s requirements were rather than having an open dialogue with the investor to establish its requirements.
- Jeff Hunton from the private sector took the initiative, incurred personal expense and was pro-active in showing Hitachi that the North East was the best place for the investment. This brought the investment to Durham.
- This example shows the danger of having division amongst the seven local authorities and the confused message that this can give to potential investors.
2.3 Information Sharing
- Information is not shared adequately between the Local Authorities and between the Local Authorities and the private sector.
- Although this is often for reasons of confidentiality, there is a fear that there is an element of protectionism with Local Authorities looking after their own interests.
- An ‘online pipeline’ currently exists which details investors who have registered an interest in the region. Newcastle Gateshead Initiative has access to this. Questions were raised about the extent to which this information is disseminated.
2.4 Durham’s Japanese Representative
- There is a currently a representative for Durham Council employed in Japan.
- There was a consensus that this is a wasted resource if the representative is only looking after the interest of Durham.
- The remit of this representative is to primarily attract investment into Durham and if the potential investor is not interested in Durham, then the representative will pass their details to the North East LEP. Questions were raised about how this process actually works in practice.
- It was suggested that this representative should be funded by all the Local Authorities.
- It was stated that eventually it is envisaged that this individual will represent the North East LEP area as a whole.
2.5 Goldman Sachs Review
- Goldman Sachs conducted a review into potential centres for inward investment in the UK.
- Goldman Sachs spoke to Newcastle City Council to establish the population size; this was stated as being 250,000.
- The minimum population size to be shortlisted was 500,000. If Newcastle City Council had cited the population of the wider North East LEP area, it would have been included on the list.
- This highlights the fact that outside of the region the North East is often identified as Newcastle There is a need to quote the facts and figures associated with the wider North East LEP area.
- Woodham wished to build a golf course, houses, and a hotel in the region.
- The developers met with the planners and the planning process was dragged out to such a degree that the pre-application phase took 2 years, it was then a further 17 months until the Planning Committee met.
- During this time the developers were asked to obtain the consent of 21 separate officials from Durham Council.
- By the time the Planning Committee met the potential investor had gone bankrupt.
- It was stated that there needs to be a quicker planning process in order to encourage development.
2.7 Highways Agency
- It was suggested that he Highway’s Agency and other semi autonomous groups are often unwilling to cooperate with developers.
- These groups often hold up and stagnate development and the North East LEP needs to speak to these bodies and encourage them to work towards the greater prosperity of the region.
3.0 Peer Comparison
- An Indian company was looking to invest in the UK.
- A representative from Kent Council flew to Dubai to meet with the directors of the company. He discussed the budget and the requirements. He signed a deal in Dubai to secure this investment for Kent.
- There was a consensus that representatives from the Local Authorities in the North East need to be similarly pro-active in a co-ordinated manner.
3.2 Major Northern Cities
- Manchester, Liverpool and others have even greater divisions within their cities and regions than Newcastle.
- These divisions, however, are behind closed doors and the region is outwardly presented as a united front. It was stated that Newcastle/ NE LEP should look to emulate this.
- It was stated that Liverpool has initiatives targetting Beijing, New York and London. It is therefore proactively looking to attract global investment.
- Bradford is able to work under the ‘Leeds’ umbrella, Salford as ‘Manchester’. There are great historic rivalries in both cases. There appears to be an understanding that taking on a single world renowned brand will lead to better outcomes. It is considered that the Manchester branding was an important lever behind the BBC’s move to Salford and selling the move to the BBC staff.
- It was pointed out that if you Google ‘Invest in Newcastle’ the first hit that comes up is a single page on the Newcastle City Council website which is not very well maintained or presented. The first property that was shown on a list of options was a vacant lock up shop. Not the first thing a potential inward investor should see. Googling ‘invest in Manchester’ or ‘invest in Leeds’ reveals a very different offering to an inward investor.
- The City Deals have delivered significant Inward Investment capabilities in other Cities. Manchester has funding of £1.37m per year for MIDAS (Greater Manchester Inward Investment vehicle), Liverpool has £75m identified for Economic Development. Newcastle did not secure the equivalent and should look to do so in any second round City Deal across the wider geography.
3.3 Welsh Development Agency (WDA)
- The WDA identifies potential investors as clients and seeks to entertain them in the way that a private sector company may entertain a target client.
4.1 Combined Local Authority
- The local authorities need to work towards a combined authority, particularly in relation to the benefits that this will bring via City Deal.
- This would enable the region to have one Economic Development offering rather than providing a confused message to potential investors.
- It was stated that as the North East LEP only consists of four employees with a focus on strategy. The Local Authorities need to work with the North East LEP in terms of delivery.
- The North East LEP should be the bridge to government to articulate the regions strengths and the opportunities available. This will help leverage finance for key infrastructure requirements and support the regions attractiveness to potential investors.
- It was stated that under the Localism Act there is a duty on the Local Authorities to cooperate with each other, to work together. This message needs to be fed through to the LEP to place a stronger emphasis on the Local Authorities’ statutory duty to cooperate.
4.2 Brand Identity
- There was a consensus that the brand should be Greater Newcastle. Figures quoted for Greater Newcastle should then be figures based on the wider North East LEP area. This would increase crucial figures such as population size and the size of the Newcastle economy. It was explained that corporate investors will want the security of a large and skilled workforce and that by widening the area Newcastle will appear more favourable on this basis.
- Our primary objective should be to be included on the long list, the list of possible places to invest once that investor decides to invest in the UK. It was stated that
- Newcastle should be in the top tier on that list together with the likes of Glasgow, Leeds and Manchester. Not on the second tier with the likes of Sheffield, Nottingham and Belfast.
- It was explained that there will be an Invest North East website up and running within 4 weeks. The consensus was that this needs to be a combined website not just promoting the interests of one or two of the Local Authorities in the region but providing the interests of the region as a whole.
- It was stated that any website or any database must also include a list of case studies and endorsements from people who have come from outside the region, invested in the region and been successful. Examples were given such as Insurethebox and AkzoNobel.
- It was stated that if the region is successful and presents itself as one brand and one identity this will attract greater central government funding and with it greater growth.
4.3 Role of Developing Consensus
- There was full agreement that Developing Consensus needs to get behind the North East LEP and the delivery of Inward Investment activities via the councils.
- Few enquiries come directly through UKTI or the LEP, most enquiries come direct or through agents and consultants. There needs to be a single point of contact and a support network for these projects. It was stated that a more credible body would be made up of a mix of public sector and private sector individuals and also people working in a range of sectors from within either the private sector or the public sector. This would include solicitors, developers, surveyors and architects etc.
- An example was given where links with the big four accountancy firms could open doors in Shanghai or Hong Kong etc and act as a conduit for more information about investment opportunities in the North East LEP area.
- It was suggested that Developing Consensus put on an event in London at the Head Office of one of the large property agents. This event would showcase regeneration sites within the region.
- Comparisons were made with Liverpool Council paying for First Class tickets from London to Liverpool for delegates attending an equivalent event to the Developing Consensus Conference in an attempt to draw more attention to the region.
- It was stated that Developing Consensus needs to be careful not to conflict with other organisations such as G9 and the North East Chamber of Commerce where there is an overlap. It was stated that these bodies need to be talking with one voice and getting together to discuss these issues.
- It was suggested that one option would to be have different sub-groups feeding into an overall umbrella property sector group which would then feed into the North East LEP, NGI and the Councils. The relevant disciplines could be as follows;
- Professional services
- Agency and Developers
- An alternative suggestion was that a property group including Developing Consensus and G9 suggest one member with significant inward investment experience to the LEP Board to represent property views for the region. This person could help by taking a leading role on Inward Investment strategy and implementation.
- It was felt that there was lots of representation of manufacturers on the board of the LEP but not from the property/ inward investment sector.
- The property industry foresees an increase in inward investment activity over the medium term both from the higher value manufacturing sector and also from the service and financial sectors, where cost savings and re-shoring trends are driving business change.
- Manufacturing and engineering jobs are higher value but fewer in number and require access to skills that are already in short supply. Service and financial sector jobs are sometimes lower value but potentially easier to attract in greater numbers and tap into a larger available workforce.
- A balance is needed between targeting high value sectors and landing footloose service sector projects that can deliver larger numbers of jobs.