Briefly Legal Summer 2013

SUMMER 2013

CREATING AWORLD OFOPPORTUNITYFOR ENERGYGeorge Rafferty of NOFEnergy, considers theopportunities for the UK’senergy sector followingGeorge Osborne’s recentBudget announcement

CELEBRATING 100YEARS OF UKPLANNINGStephen Litherland, SeniorVice Chairman of RTPI NorthEast reveals plans for itscentenary

HOUSE BUILDING:OPENING THE DEBATEFive experts offer theirperspective on the future ofthe house building sector in a round table discussion

INVESTMENT IN THE LEEDS CITY REGION

Ambassadorsfor Leeds CityRegion

WELCOME: By Gillian Hall

2 Briefly Legal � summer 2013

SalesCycle, NOF Energy, BusinessGrowth Fund and Galliford Try areonly a few of those who have

contributed to this publication. They give afascinating insight into the opportunities fortheir sectors. We also talk to three businessesthat have enjoyed a huge amount of successdespite challenging trading conditions overthe past few years. Their stories are inspiringand show us how bold decision making and a positive outlook can have an impressiveimpact on business success.

Our lawyers have also provided some thoughtprovoking articles on issues of nationalrelevance. We have entered the debate onemployees working from home, analyse theeffect of the Government’s Green Dealinitiative on the commercial property marketand we explain why the North East is agrowing centre of activity for technologystartup businesses.

As ever, we try to cover issues that crop upwhen talking to our clients. However, we wantto be sure that this publication continues tobe relevant and useful to you. If you have anyfeedback at all which you would like to relayto our team, please contact our PR andCommunications Manager, Kathryn Dishman,by calling 0845 901 2093 or [email protected].

I hope that you enjoy reading this latestedition of Briefly Legal and find some valuableinsights within its pages.

Gillian HallSenior Partner, Watson Burton

Our latest offeringfeatures articlesfrom businessesthat operate at theforefront of theirsectors whereinnovation is key to their on-goingsuccess.

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Welcome to the summeredition of Briefly Legal

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3Briefly Legal � summer 2013

WELCOME: Contents

BUSINESS FOCUSVision + Determination= Results ........................................4

Accessing finance: Helping or hindering growth? ..........8

Yahoo! I’m working from home today ..................................12

SECTOR FOCUSCreating a world of opportunity for energy....................14

How the North is well placed to catch a wave on the risingrenewable energy tide ..................16

Celebrating 100 years of UK planning ..............................18

A greener Britain?..........................20

House building: Opening the debate ......................22

Capturing that lost online sale ......26

Bright outlook for tech startups ....28

REGIONAL FOCUSAmbassadors for Leeds City Region ....................................32

FIRM FOCUSPlanning for success ....................36

60 seconds with Richard Palmer ....38

4 14 32

8 12

20 26

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Contents

BUSINESS FOCUS: VISION + DETERMINATION = RESULTS


With business confidence on the up and the pain of theeconomic downturn starting to fade, we invited threeNorth East based companies and David Colclough ofBusiness Growth Fund (BGF) to discuss what strategiestheir businesses have employed in recent years tomitigate the impacts of the recession and position themfor future growth.



ne of the overriding themes wassimply a determination to succeed,but one of the most challenging

factors was being able to take stock of thecurrent position and take swift, decisive actionto secure its future.

As a long established North East company,Potts Print UK (Potts) had experiencedprevious recessions and this time around, the absence of public sector spending beganto affect their market. John Conway, SalesDirector, said “we noticed that print spendwas slowing and marketing budgets werediminishing. Although confident we couldmaintain our position, we doubted we couldsustain larger growth so we began an analysisof 'who and what is good for Potts?'

“As part of our strategy review, we took thetime to get a better understanding of ourclient base: over 400 active clients of varyingsizes and across diverse sectors throughoutthe UK and Europe. We were then able toidentify the challenges for these organisationsand apply sensible and relevant print, packagingand direct mail solutions to benefit their ownplans”. This ‘client centric’ approach helped to maintain customer loyalty through the mostchallenging of times where the impacts of therecession were multiplied by the increaseduse of digital media at the expense oftraditional print.

In the leisure sector the effects of thedownturn were not so immediately felt.

“Prior to the recession we had been inacquisition mode, but when we began to hear about companies that were in difficultieswe decided to put any further acquisitions on hold. Unlike many others, we did notexperience a downturn; we just put our plans on ice” said John Weir of Wear Inns.

Whilst some businesses put growth plans on hold, others had to take more significantmeasures to ensure business longevity. RyderArchitecture had been on something of a roll:after winning a three-year programme ofcontracts worth £20 million in fees, they had invested in additional resources and staff. The company was then advised that the multi-billion pound Learning and SkillsCouncil college building programme was to end.

“In January 2009, we made 18 redundanciesas a result of the programme being reviewed.In April 2009 we heard it was not going aheadat all. A further 48 staff were made redundantand a range of other cost saving measureswere introduced” said Mark Thompson,Managing Partner.

“We believed that our range of office locationswould be beneficial in the upturn, so, ratherthan close any individual office, we maderedundancies at all levels throughout thecompany, affecting everyone from supportstaff to shareholders including many who had been with us for years.”

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Left to right:John Conway of Potts Print UK, John Weirof Wear Inns, Mark Thompson of RyderArchitecture and David Colclough ofBusiness Growth Fund

There was the need to be realisticabout the business’ position, andtake action as quickly as possibleto ensure its future



Having taken whatever steps wererequired to ensure survival, how thendid the businesses start to positionthemselves for growth?Wear Inns took the opportunity to review each and every supply contract, ensuring that their cost base was aligned with themarket. “By renegotiating our terms we werenot only able to reinforce our position withsuppliers, but retain margin throughout thetwo duty increases of 2011/12 – in somecases, we even lowered our prices” said John.

“We judged that the price of property wouldfall further. We waited until prices had bottomedout and were able to buy pub premises atsome 25%-35% less than 12 months earlierwhen we re-entered the market in January2010. We have managed to double in sizesince then which has been due to funding we obtained through Business Growth Fundand NVM”.

At Potts they changed their sales strategy to take a more sector based approach. “Thisallowed us to analyse profitability in each ofthe sectors, readjusting our pricing strategiesaccordingly. Additionally, we increased ourservice levels by offering value engineering of printed products, removing cost wherepossible, and complementing this with addedvalue services in design, digital and logisticalsupport. This strategy was also applied tocompanies with reduced print expenditure.We tried to make their campaigns work harder by offering alternative specificationswhen possible” said John.

Access to finance and relationships with ourbusinesses banks were a key part of ourbusinesses strategies. Mark Thompsoncommented, “Access to finance played ahuge role. We had been trying – unsuccessfully– to meet with our bank manager from thesummer of 2008. When we eventuallysucceeded, the bank would not renew ourexisting facility so the remaining directors hadto invest which we were prepared to do, but it left a bitter taste.

Now we have a different banking team andthe relationship has gone from strength tostrength, which serves to demonstrate a keybusiness truth: good people are what reallymake the difference”.

In the leisure sector, the story was the same.“We have been badly affected because thebanks are not willing to lend. They believe the leisure market is too risky. We have beenfortunate to secure funding through BGF but

private capital is more expensive than bankdebt. We began 2010 with 15 pubs and aturnover of £7.5m and now we have 26 pubsand are on target for a turnover of £15m,thanks to BGF” said John Weir.

“We still want to expand of course but it will all depend on how we manage the expansion.Two years through our three year plan, I cansay we achieved year one targets and yeartwo is also looking OK at 40 pubs.”

Business Growth Fund (BGF) was establishedto help Britain's growing smaller and mediumsized businesses prosper. As the engine roomof the UK economy, SMEs depend on havingthe means and confidence to grow and BGFhas access to £2.5 billion to make thispossible. To date, BGF has backed 27companies across the UK.

David Colclough of BGF said, “Due to themarket turbulence of the last six years,companies are now seeking more flexible

funding support. A number will have welldeveloped business plans and require a long-term funding partner who will go forward withthem offering wider business support as wellas financial backing.”

“Those companies we’ve already helpedreflect different levels of investment with BGFproviding medium to long term scope todeliver plans. We accept that some companiesmay go backwards before they go forwards –so we’re realistic in our expectations.”

“Of course it is difficult to access funding onthe same terms as five years ago but manybanks are still lending and in our case, wehave an available funding pot of some £2.5billion, so there is a lot more we can do. I wouldencourage anyone who is looking for fundingto come and talk to us and if we cannot help,we will direct them to someone who can”added David.



In particular was the need to be realistic aboutthe business’ position, and take action asquickly as possible to ensure its future.

“If we had not cut so deeply and so swiftly, wewould not have survived. Competitors beganscaremongering, but they themselves had tomake redundancies later when we werestarting to see growth” said Mark.

“Although the cuts were painful, we had to bedecisive and this is where employment law

runs contrary to business sense – the 90-dayconsultation period for making redundancieson this scale can mean the differencebetween success and failure”.

John Weir added “the last few years havebeen good for us. I think we made the rightdecisions. We might have expanded moreand created more jobs, but we are delightedwith the 150 full and part-time jobs that wehave created”.

When it came to lessons learnt, the panel werekeen to share their experiences so that othersmight benefit from them.

Our panellists in brief:

And what of the future? Potts has been approved for regional growth funding which has helped towards the financingof new equipment and investment in facilities and staff. “We operate with a consultativeapproach and will continue to grow by listening, talking, providing high service standards andapplying sensible business practices. Staff training and development, performance measurementand working with our suppliers to identify purchasing savings are all crucial to this approach”commented John.

“The future's looking good” said Mark Thompson. “We recruited 15 new graduates last summerand will exceed that this year. Our pipeline is strong and our strategy of reinvestment into thebusiness throughout the recession has resulted in the launch of BIM Academy, a joint venturewith Northumbria University and the acquisition of practices in London and Glasgow, as well as establishing a team in Hong Kong who are currently pursuing exciting projects across theregion”.

“This is our 60th anniversary year and given the last few years, it’s even more of a cause forcelebration.”

At Wear Inns, they are confidently facing the future and are “well placed to capitalise on therising economy, which we are told is on the way”.

Based in Cramlington, Potts PrintUK is an expanding printing,packaging and direct mail company.Established in 1875, turnover is now£14m and the company’s successstems from its focus on ‘The ThreeCs’ - Cost savings, Continuousimprovement and Client satisfaction.

Ryder Architecture has offices inNewcastle, London, Glasgow andLiverpool and a growing internationalportfolio. The firm appears in SundayTimes 100 Best Companies to workfor 2013 and this year won best newentrant in the Architects Journal100.

Increasingly recognised as a majorforce in the provision of an excellentcustomer experience at the mostaffordable prices, Wear Inns wasfounded in 2006 and specialises inthe management and acquisition offreehold pub premises in the Northof England.

Business Growth Fund (BGF)provides long-term capital forgrowing British companies, investingbetween £2m and £10m in returnfor a minority stake in a businessand a seat on the board incompanies that are typically turningover between £5m and £100m.

... well placed tocapitalise on therising economy,which we are toldis on the way

BGF qualifying criteria The common characteristics are

• a management team that is passionateabout the business

• a proven business model

• the need for next stage funding forworking capital to facilitate UK oroverseas expansion or a new productlaunch. Others may require capital to fundorganic growth or an acquisition strategy.

Companies at an earlier stage in theirdevelopment with less mature growthforecasts may also be suitable and wish to discuss with us how to make theirfunding proposal more attractive. By jointdiscussion and debate, we can oftenstimulate ideas which lead to an alternativebusiness model.

3 21

BUSINESS FOCUS: Accessing finance: Helping or hindering growth?

“In the current marketplace,there has probably neverbeen such a variety offunding options forbusinesses to tap into

Accessing£inance:

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£££ £8 Briefly Legal � summer 2013


Helping orhindering growth?

a survey of over 290 businesses in the NorthEast and Yorkshire with the aim of establishingwhether the accessibility of finance, or indeedan understanding of the options available tobusinesses, is helping or hindering growth.

As a whole, the results show that businessesare optimistic, with three quarters predictingthat the regions will experience growth. 31%of respondents are hoping for growth of 10%or more in the next twelve months, yet themajority (53%) still feel that a lack of access to finance is hindering their business’s growth.Six in ten admit that they have had difficultiesaccessing finance with nearly a third (31%)saying it was very difficult or even impossible.

A number of barriers to accessing financewere identified. Respondents believe that the downturn in the economy has limited the amount of finance available for businessesand the costs associated with gaining finance

are quite high. A number of those surveyedalso stated that they believe the level ofcontrol exerted by funders is too onerous

On the flip side those businesses that havebeen able to source finance have mostly done so through a bank loan, which showsthat perhaps the rein on bank lending isloosening.

In the main, the results show that businessesin the North, as well as elsewhere in the UK,are not fully aware of the appropriate meansof accessing funding for their business andmany are put off by the doom and gloomheadlines which state that money simply isn’tavailable. With this in mind, maybe now is thetime for businesses in the regions to changetheir mind-set, seize the opportunities ofalternative finance options and grow theirorganisation in 2013 and beyond.

n the current marketplace, there hasprobably never before been such a varietyof funding options for businesses to tap

into. With the emergence of crowd fundingplatforms like Seedrs helping early stagecompanies access new finance and the likesof Business Growth Fund providing largerdevelopment capital investments to SMEs,businesses are now able to explore fundingopportunities from a variety of sources. Theserange from high street banks, asset basedlenders and grant making bodies to privateequity and venture capital investors, businessangels and online social networks.

But with the variety of options to consider andnetworks to navigate comes the challenge ofdetermining which source of funding is bestfor your business.

Watson Burton, in association with InsiderMedia and Garbutt & Elliott recently completed

I

The narrow escape from the TripleDip Recession seems to havepaved the way for more bullish talkaround ‘economic green shoots’ inthe UK. But is this sentiment filteringdown to grass roots level amongstbusinesses in the North?


access to finance: helping or hindering growth?

A survey of over 290 businesses in the North East and Yorkshire

A sunny outlook

3/4 predict that the regions will experience growth (almost a third hoping for growth of 10% or more in the next 12 months)

Over 50% of respondents looking to raise finance this year

Out of reach

Six in ten had difficulties accessing finance with nearly a third (31%) saying it was very difficult or impossible

A changing landscape

Banks still main source of finance (50% Yorkshire, 30% North East)

Asset based lending now second highest source for Yorkshire business

Releasing equity on mortgages increasingly popular

Angel investments increasing in popularity in the North East

Sources of funding

Investing in what?

North East • new products and services (39%)• plant and machinery (33.3%) • organic growth (33.3%)

Yorkshire• plant and machinery (35%)• acquisitions (31.5%) • organic growth (29.5%)

44%

53% in Yorkshire say this is restricting growth. 44% in the North East

53%

Now is the time for businesses in the regions to change their mindset, seize the opportunities of alternative finance options and grow their business in 2013 and beyond Duncan Reid, Partner, Watson Burton

Business only 18 months old and banks unwilling to lend, despite full order book for 2012/13 and 40% secured for 2013/14 Anonymous

Angel investments and loans

Asset based lending

Bank loans/mortgages

Crowdfunding

Equity investments

Family/friends

Government grants/loans

Stock markets (inc AIM and Plus)

Other (please specify)North East

Main barriers to finance

1 Simply not available 2 Too much control by funders 3 Associated costs

Yorkshire

Angel investments increasing in popularity in the North East



£


“31% of respondentsare hoping for growthof 10% or more in thenext twelve months,yet the majority (53%)still feel that a lack ofaccess to finance is hindering theirbusiness’s growth

Despite the doom and gloom constantlystreaming from the UK business press,respondents within the North East seemoptimistic about business growth over thenext twelve months. 5% of those surveyedindicated that they will be looking at raising inexcess of £5m in the year ahead, with fundsbeing utilised for the development of newproducts and services, the purchase of plantand machinery as well as organic growth.

The method in which they will choose toobtain funding differs depending oncircumstance and regional location. One ofthe most interesting differences between theNorth East and Yorkshire relates to angelinvestment and loans. Just 4% of Yorkshirebusinesses participating in our survey hadutilised this source of funding, whilst almost26% of those in the North East had benefitedfrom this approach. One factor which couldaccount for the difference is the smaller poolof business angels operating within the NorthEast, which means that businesses are moreaware of the angels who are actively backingthe growth ambitions of businesses. In addition,the links between the Finance for BusinessNorth East funds (the “JEREMIE” funds) andthe angel networks may be more mature in theNorth East, meaning companies are matchedwith the most appropriate angel investors moreoften. Whatever the reason, it is positive thatNorth East businesses have demonstratedtheir willingness to engage with businessangels, who can offer much more than fundsto an investee business.

So what are our recommendations to anybusiness seeking finance? Be honest withyourself at the start. If you are considering

venture capital investment, are you comfortablewith a venture capital fund’s desire for an exitwithin a specified timescale of say 3-5 years.If you have longer term plans, which don’tinvolve selling your organisation within such atimescale, venture capital investment may notbe the most appropriate option for you.

Consider what your requirement for funding is.Many of the respondents to our survey wantedto fund the acquisition of plant and machinery.There are some very innovative fundingsolutions in this sector, and the traditionalasset based lenders are branching out intonew products, such as funding the acquisitioncosts of bespoke software solutions, whichcan be then licensed back to a company overthe life of the loan.

Don’t necessarily go for the obvious solution.Some venture capital investors and businessangels will be more than happy to invest inorder to fund the acquisition of property ornew machinery if they support a clear growthstrategy for a business. It is often easy to lookonly to the “traditional” providers of finance inthese circumstances, but we would stronglyadvise seeking the method of funding mostappropriate to your business needs.

North East perspective: set for growth

Find out how ourcorporate group can help you by getting in touch withPaul Wigham

Surprisingly, 59% of respondents in Yorkshirestated that raising finance over the last 18months has been difficult to impossible.Those that have successfully raised financeduring this time highlighted that the majority of funding is in fact still coming from thebanks. That trend looks set to continue,particularly in light of the Bank of England’srecent extension of its £80bn Funding forLending Scheme, which was brought inspecifically to boost support to credit starvedSMEs by incentivising banks to lend more.

In spite of that, what does remain clear is thatuntil planned growth is realised, businesseswon’t be able to rely entirely on the banks.Other options will need to be fully exploredand exploited to suit the particular identity and needs of individual businesses. However,one source of funding that businesses in theregion perhaps still need to consider further is Government backed loans or grants.

The Regional Growth Fund (RGF) supportsprojects that are using private sectorinvestment to create economic growth andsustainable employment. Also, despite theEnterprise Guarantee Scheme being plaguedby bad press, this source of funding canprovide viable businesses with loans of up to £1,000,000, particularly those that do not

have the normal requirements of security.Perhaps at the other end of the spectrumthere are new initiatives, for example, theSocial Incubator North which recentlylaunched in Sheffield. This is a co-fundedGovernment initiative that offers investment,bespoke business support and access toexpertise to grow entrepreneurial ideas.

Interestingly our survey results have shownthat there seems to be a great shift in peopleseeking asset based loans as a source offunds – the second highest source for Yorkshirebusiness. The tide has definitely changedhere. In the past, many business owners havebeen wary of using these types of facility. Thisreluctance is based on a historic stigma thatcould portray businesses as having financialproblems, as well as the belief that it will be a costly or administrative nightmare.

Yorkshire perspective: a change in motion

Find out how ourcorporate group can help you by getting in touch withAndrew Francey

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0845 901 [email protected]


There are reportedly 1.35million people working inthe UK whose main work is freelance and a further200,000 do freelance work as a second job

BUSINESS FOCUS: Yahoo! I'm working from home today

12

Yahoo! I'mworking fromhome today

Briefly Legal � summer 2013

96% of all employers in the UK now offer someform of flexible working. In the US, over a millionmore Americans worked from home in 2010 thanin 2005. But not all businesses seem to beconvinced.


BUSINESS FOCUS: Yahoo! I'm working from home today

employees not collaborating as effectively asthey could face-to-face and that they are notdoing the work they are paid for. Others areconcerned that the rise in working patterns,such as zero hours contracts, has a hiddensocial cost, reducing job security andemployee rights.

Marissa Mayer seems to have focussed moreon the need for innovation and how to achieveit than mistrust of employees. The debate thatsurrounded her decision polarised into howbest to generate insights and ideas critical to gaining a competitive edge in a fast-pacedindustry in which Yahoo! operates and how to work efficiently in the modern world, attractand retain talent. Her ideas are exemplified bythe image of impromptu face-to-face meetingsaround water-coolers and coffee machineswhich create a melting pot for innovation. Thisin turn allows for the free exchange of ideas and the possibility of quick meetings beingorganised within an office to react to bothideas and change. The contrary argumentsuggested that those who worked from homecould be far more productive without the fullrange of workplace distractions and noise.

The truth is actually far more nuanced thaneither side of that debate would let on. Somework probably is best done at home, but neverhaving direct staff interaction would be damagingto most businesses. It depends on the kind ofwork an employee is doing and where theyare best doing it.

Performance Marissa Mayer took over a declining businessand clearly needs to focus on innovation toclaw-back market position and advertisingrevenue. Most employers are primarilyconcerned with recruiting and retaining talent,delivering their services or products efficientlyand want to manage staff to get the bestperformance from them. Yahoo! is no different.Marissa Mayer may have sacrificed homeworking in the drive for innovation, but she stillneeds talent to create and deliver those ideas.Competing with other Silicon Valley companies,she recently doubled paid maternity leave to 16weeks for US staff (she only took two herself,but did build a nursery in the office next door!).

New fathers get 8 weeks paternity leave andnew parents are given $500 to welcome baby.

For some, in the background there is thelurking fear that working from home is asynonym for not working at all. In fact thereare many tools available to employers todayto monitor employee performance from online‘keystroke’ tools to output measurements.Organisations are normally able to recordemployee performance. It is true that onworking from home employees will often fittheir working time around other commitments.Coffee will be made numerous times, thewashing machine will be emptied, bills getpaid and someone may come round for lunch. However, the net result might not beunproductive. There are some tasks which are better done away from distraction andinterruption and the gains made in quality and speed on those tasks by someoneworking from home can be significant, as canthe gains in employee goodwill where this fitswith their lives. There are equally occasionswhen face-to-face meetings will inevitablyachieve more than any number of telephonecalls, emails or video conferences can.

Retaining talent There are reportedly 1.35 million peopleworking in the UK whose main work is freelanceand a further 200,000 do freelance work as a second job. This represents an increase of11.9% between 2008 and 2011. The numberof firms using remote or teleworking staff has risen from 13% to 59% in the last 5 yearsand 82% of part-time workers are activelychoosing part-time work to fit around their life circumstances. A recent CIPD surveyindicated that approximately 75% of UKemployers felt that implementing suchpractices had a positive impact on talentretention, motivation and staff engagement.

Faced with an increasingly flexible workplace,most employers will have to look at flexibleworking to recruit and retain the talent theyneed, whether they want to or not. Employerswill have to actively decide upon, implementand promote a staff mix and working policiesthat support their business needs to remaincompetitive in a rapidly changing market.

arissa Mayer became Yahoo!'sCEO in mid-2012. She had 13years prior experience at Google

where she rose to be a Vice President. Shedeveloped some of Google's most successfulproducts and is listed as an inventor in herown right on several patents in artificialintelligence and interface design. The companiesshe came from and moved to are both modernglobal technology businesses at the forefrontof innovation. Yet one of Marissa Mayer's earlychanges at Yahoo! at the beginning of 2013was to ban home-working for Yahoo! Staff.

Employees were told to relocate from theirhome offices to a Yahoo! office within a fewmonths or leave the organisation. The reasongiven was that “to become the absolute best place to work, communication andcollaboration will be important so we need to be working side-by-side. That is why it iscritical that we are all present in our offices”.

Flexibility Marissa Mayer’s move has clearly offendedmany within Yahoo! but does it herald a widertrend reversal to more traditional workingpractices in white-collar roles?

The evidence seems to be no. In the UK,following the recession, businesses soughtflexibility to adapt to a volatile and uncertainfuture. Many investigated a variety of flexibleworking arrangements, from home-working to reduced days per week or compressedworking, increased use of freelancers,consultants, agency staff and part-timeworking. But who gains from greater casualand flexible working?

Proponents of increased flexibility in theworkplace argue that both employer andemployee reap the rewards. They believe that employers gain flexibility, responsivenessand can manage their cost base in line withavailable work. They find it easier to attracthighly skilled individuals, staff are more satisfied,more productive and absences decline whenthey are able to work in a way that suits theirlifestyles and demands on their time. Cynicsthink businesses are losing out on ideas by

M

Find out how ouremployment group can help you by getting in touch withDavid Jenkins


SECTOR FOCUS: Creating a world of opportunity for energy

14

Creating a worldof opportunity for energy


t is often suggested that oil & gas is asunset industry. However, this couldn’t be further from the truth.

Thanks to the supply chain’s development ofnew technologies, supportive tax regimes andthe price of oil, investment in the recovery ofresources continues to increase, which isproviding considerable opportunities forsupply chain companies.

The North East, in particular, is a globallyrespected source of oil & gas supply chainsolutions and has played an integral role sincethe discovery of North Sea oil in the late 1960s.

In the decades since, the region’s supplychain has established itself in multiple segmentsof the oil & gas industry, such as our excellentsubsea sector, and successfully operates insuch diverse geographic locations as SouthAmerica, Australia, Malaysia and South Africa.

Within the NOF Energy membership are 230North East companies, which, between them,

generate a combined turnover of £2.5billion,the majority of which comes from oil & gas.

The UK oil & gas industry supports 340,000jobs directly and indirectly and another100,000 are involved in exporting goods/services. Notably, 15%, approximately 66,000,of the total number of people working in theUK oil & gas industry, reside in the North East.

It is the role of the supply chain to drive theinnovation and technology that will ensure theplanet can maximise the benefit of its oil & gasreserves.

Oil and gas fields Established oil fields, such as the North Sea,also still have plenty to offer. For example, it isestimated that the UK continental shelf holdsas much oil as has already been extracted.

And it is the extraction from these establishedoil & gas fields that will ensure that the industryremains a prominent part of the UK economy.

The Forties Field in the North Sea is a primeexample of how the application of improvingtechnologies and the experience of the supplychain is playing a significant part in thesector’s future.

When Apache acquired the field in 2003 itwas due for decommission in 2012. However,in that period, 120 development wells werediscovered and drilled and five seismic surveyswere undertaken with another planned for thisyear.

This has led to decommissioning beingdeferred indefinitely and the site is currentlyproducing 50,000 barrels of oil a day.

A time of change These existing fields are also benefiting fromthe recent changes to the tax system. Theannouncement by the Chancellor, GeorgeOsborne, to introduce a Brown Field Allowanceto help increase the lifespans of older North

I

George Rafferty, Chief Executive of NOF Energy, considersthe opportunities for the UK’s energy sector followingGeorge Osborne’s recent Budget announcement.


SECTOR FOCUS: Creating a world of opportunity for energy

Sea fields is a major endorsement by theGovernment and acknowledges the significantcontribution the sector makes to the economythrough job creation, investment and directtaxation to the Treasury.

The Brown Field Allowance shields up to£250m of income in qualifying brown fieldprojects, or £500m for projects in fields payingPetroleum Revenue Tax, from the 32 percentSupplementary Charge rate. This will providetax relief of up to £80m or £160m respectively.

Therefore, with the activities in existing fieldscoupled with the discovery and recovery ofhard to reach resources, oil & gas will remaina central part of the global energy mix fordecades to come.

This capital investment has risen year on yearsince 2003 and is forecast to reach £100bnby 2013-14, which will provide considerableopportunities for high quality supply chaincompanies.

As the UK’s business development organisationfor oil, gas, nuclear and offshore renewables,it is the role of NOF Energy to support theactivities of its members to assist them insecuring a proportion of the opportunitiesavailable in the market.

We work incredibly closely with our 410-strongbody of members with a range of businessdevelopment services such as internationalmarket visits, networking events, workshopsand member-to-member introductions thatsupport their ambitions to enhance theirposition in the supply chain.

Priorities These companies, according to the NOFEnergy annual survey carried out at the end of2012, are clear that oil & gas is their prioritysector for the coming year, and beyond, andthey are making investments and introducingnew technologies that give them an edge in acompetitive global market.

George Rafferty,Chief Executive of NOF Energy

@NOFEnergyLtd

It is often suggested that oil& gas is a sunset industry.However, this couldn’t befurther from the truth

While other emerging sectors, such as offshorerenewables, are starting to gain prominence inthe energy mix, oil & gas will remain core todelivering the country a balanced energy future.

The sector is one of the economy’s jewels inthe crown creating jobs, driving investmentand providing around £8 billion annually to the Treasury in taxation.

Therefore, there is no denying that rather thansetting, the sun is definitely shining on theindustry and the opportunities open to NorthEast companies with the right skills, productsand services are plentiful.

SECTOR FOCUS: How the North is well placed to catch a wave on the rising renewable energy tide

16

How the North is wellplaced to catch awave on the risingrenewable energy tide


Any surfer will tell you that if you want to catch a wave, itis all about timing. The ideal scenario is to begin standingjust as you feel the pull of the wave.

uch advice would not go amiss withany game-changing decision, whichis all about knowing when to hang

back and when to push ahead.

So when it comes to re-balancing the UKeconomy between regions and away fromsome of our traditional industries towards a greener, lower carbon environment, theNorthern region seems well placed to takeadvantage of the green energy revolutionwhich is really starting to gain momentum.

As a region we began the shift away from itsformer traditional heavy industrial base someyears ago and, the foundations have now beenlaid to catch the rising wave of activity aroundrenewable energy as the UK seeks to achieveits emissions reduction targets and becomeless reliant on energy imports.

Rich in academic and research facilities aswell as huge swathes of countryside andcoastline, the North of England certainlyappears to have the intellectual capacity and natural resources necessary to carve a niche for itself within the UK renewablesmarket - if not globally.

You just have to look around to see the rapidgrowth of renewable energy sources in theNorth East to conclude that with carbonreduction targets to meet, they are only likelyto increase.

The scale and impact of the kind of renewableenergy projects we are witnessing will do muchto re-energise the regional economy, creatingmany hundreds of new jobs as well asproviding a much needed injection of inwardinvestment to pump prime new schemes.

The award-winning National RenewableEnergy Centre in Blyth has already investedover £150m of UK Government, private andEuropean Union funding to create a uniquetesting and research facility which is enablingthe industry to deliver lower cost and morereliable power.

Its team of scientists and engineers areoperating some of Europe’s largest researchand testing facilities for electrical networks,offshore wind and marine and tidal powergeneration technologies.

A further 140 jobs are to be created inNorthumberland through the construction of an £80m renewable energy investment by Estover Energy at the site of AesicaPharmaceuticals in Cramlington. The biomassheat and power plant will use low grade woodfrom nearby local forestry operations tosignificantly reduce Aesica’s carbon footprint.

Pivotal to the ability of the UK to meet itsgreen energy targets is the £3bn GreenInvestment Bank (GIB), launched by thegovernment in November 2012.

S


SECTOR FOCUS: How the North is well placed to catch a wave on the rising renewable energy tide

The Northern regionseems well placed totake advantage of thegreen energy revolutionwhich is really starting to gain momentum

The rationale behind its funding model - thatits three billion pounds of government moneywould leverage private sector projects - certainlyseems credible given the results of its first fivemonths of operations.

GIB has already provided £635m of investmentfor 11 transactions which have a total value ofsome £2.3bn with the rest of the funding comingfrom the private sector - amply demonstratingthe anticipated payback ratio of £1 of publiccash to £3 of private investment.

Here in the region, we have already benefitedsubstantially from GIB funding. We have anew anaerobic digestion plant in Middlesbroughthat will convert the region’s waste intoelectricity was the first project to get fundingfrom GIB when it launched.

Operated by Earthly Energy, GIB’s £8m cashinjection attracted a further £8m of matchingprivate sector funding. This is just one of sixsites in the UK now secured by EarthlyEnergy, three of which are in the North.

In Yorkshire too, sixty permanent jobs areplanned as a result of a further energy fromwaste scheme which is being developed byShanks and Wakefield Council. The recyclingand anaerobic digestion facility, which is worth£750m, has received £30.4m backing fromGIB. It will power about 3,000 homes andcreate around 250 jobs during the constructionphase.

It is one of five waste or biomass projectsfunded by GIB so far including the enablementof the UK’s biggest coal-fired power station,Drax in North Yorkshire, to convert some of its coal boilers to wood and other biologicalmaterials.

The level of GIB support for biomass plantshas nonetheless drawn heavy criticism fromenvironmental groups who are particularlyconcerned about the use of whole trees in the biomass process, instead of wood wastesuch as bark, chippings or other residues.

The issue is around the difficulties of accuratelycalculating the carbon emissions which relieson assumptions being made about where thewood is coming from and what is going to beburned. The irony may well be that we cannotactually know whether biomass being burntwith the support of taxpayer subsidies, issaving any carbon emissions at all.

But given the latest estimates from EUstatistics agency Eurostat - which suggestthat UK CO2 emissions climbed by 3.9 percent last year, compared to 2011, whileGermany saw a 0.9 per cent increase – theUK will be very much under the spotlight asEurope’s largest polluter, and the biomassdebate will undoubtedly continue apace.

With the need to push ahead further andfaster on the renewables front, we shouldcount ourselves fortunate to have on ourdoorstep such a wealth of technology-basedtalent supported by an astute professionalservices sector. This is and should be regardedas a major and quite genuine opportunity.

As GIB squares itself up to broaden its sphereof influence and its financial backing in thefuture, the North of England undoubtedly hasa tremendous opportunity to contribute to itssuccess and its aspirations for a greener UK.Now is the time for us to stand up and catchthe wave.

Find out how ourenergy group can help you by getting in touch withChristopher Graham


SECTOR FOCUS: Celebrating 100 years of UK planning

18

Celebrating 100years of UK planning


n the 11th July 1913 a provisionalorganising committee wasestablished in London and an

invitation was sent to potential members to join a ‘Town Planning Institute’.

The first meeting convened on 21st November1913 and was chaired by Thomas Adamswho, on the 13th March 1914, became thefirst elected president of the Institute.

Today the Royal Town Planning Institute (RTPI)as we know it is much larger, with some22,000 members nationally. In order to facilitateits function the RTPI is broken down intoregional areas with each region being guidedby an elected management board. In thenorth east there are currently around 800members of the institute.

• A series of challenge days aimed at schoolaged children will take place throughout theyear with the aim being to engage childrenin matters that concern the built and naturalenvironment

• A free centenary reception will be open to all regional members of the Institute

• A 100km bike ride will be organised formembers and their friends, families andcolleagues

• A high profile speaker will be arranged tospeak at the annual Thomas Sharpe lecture(in association with Newcastle University)

• A planning related quiz and pub crawl will be arranged and aimed specifically atyounger members of the Institute

In 2014, I will take over the reins as theChairman of the RTPI north east, in what will be the institute’s centenary year.

To celebrate 100 years of being, the NorthEast region will be hosting a series of eventsopen to all its regional members and others inthe development industry.

In addition to the normal events hosted by theInstitute on an annual basis the RTPI will berunning the following events throughout 2014:

• A time line exhibition which charts thehistory and celebrates the achievements ofPlanning. The timeline exhibition will bedisplayed in the Centre for Life in March andthen subsequently in other areas within theregion throughout the year

O

The term ‘Town Planning’ and its statutory practice goback as far as the Housing, Town Planning Act 1909,which was the first Act of its kind that permitted localauthorities to prepare schemes for land in the course ofdevelopment, or likely to be developed.


SECTOR FOCUS: Celebrating 100 years of UK planning

We are lookingforward to anexciting yearfilled with eventsto celebrate theachievementsof planning overthe past 100years and thosethat have madeit possible

• A special centenary dinner, open to allmembers and others who work within thedevelopment industry, will conclude theyear’s celebrations

We are looking forward to an exciting yearfilled with events to celebrate the achievementsof planning over the past 100 years and thosethat have made it possible.

Whilst we are still in tough economic timesthere is a feeling of optimism within thedevelopment industry that things arebeginning to improve.

Positive planning has never been as high onthe Government’s agenda and in my year aschairman of the institute I want to continue thetheme of positive planning to achieve a moreprosperous economy for the region and thecountry as a whole.

The centenary year will be sponsored byNathanial Lichfield & Partners and BartonWilmore, two of the UK’s leading planningconsultancies.

Stephen Litherland,Bellway Homes Plc Senior ViceChairman of RTPINorth East

@RTPI_North_East

Planning in the UK: An overview The planning system has changed significantlysince its inception by theHousing, Town PlanningAct 1909 and is stillevolving. Recently, further noteworthy changes have been implemented by the CoalitionGovernment, which has introduced radicalreforms into the planning legal system sincecoming to power in 2010. They have givennew powers to local councils, developers,communities, neighbourhoods andindividuals and are promoting economicgrowth and localism at the same time.Some of the new legislation includes:

• The Growth and Infrastructure Act 2013,which aims to remove obstacles todevelopment proposals by reducingevidential requirements and allowingappeals to be made directly to theSecretary of State

• The Town and Country Planning (GeneralPermitted Development) (Amendments)(England) Order 2013, which will allowconversion of some commercial buildingsto residential use

• The Community Infrastructure Levy(Amendment) Regulations 2013, amendsthe 2010 Regulations, which inter alia,provides for Parish Councils to be thebeneficiary of 25% of CommunityInfrastructure Levy

• The Localism Act 2011 provides newpowers to Local Communities to promoteNeighbourhood Plans and retention ofcommunity assets

• The Enterprise and Regulatory ReformAct 2013, contains various reforms tolisted buildings and conservation areacontrols

Find out how ourplanning team canhelp you by getting in touch withAmanda Campbell


“At current rates of consumption,there is enough crude oil in theworld’s major oil fields to lastanother forty years

Institute of Mechanical Engineers

SECTOR FOCUS: A greener Britain?

20

A greener Britain?


The Green Deal Plan:how does it work?Once committed to the scheme, The GreenDeal Plan is a simple mechanism that willallow consumers to make energy efficiencyimprovements to their homes or businesspremises, through an accredited provider, at no up-front cost, with the costs beingrecouped through a Green Deal charge levied on their utility bill.

The Government has endeavoured to makethe Green Deal Plan attractive to potentialconsumers and have garnered a “GoldenRule”, that the “expected financial savingsmust be equal to or greater than the costsattached to the consumer’s energy bill”.

To underpin this level of consumer protectionism,the Green Deal stipulates that any potentialenergy efficiency improvements to a propertymust be:

• assessed by an accredited advise

• installed by an accredited provider

Consequently the new legislative frameworkhas introduced the possibility of widespreadchanges to both the residential and commercialUK property markets as well the opportunityto create a niche market for property surveyors,energy efficiency consultants, constructioncompanies and tradesman.

ou don’t have to look far to find rather jaw-dropping statistics regarding 21st Centuryfuel consumption to appreciate that both fuel poverty and climate change are at thetop of the Government’s agenda.

The Green Deal is the latest provision designed to “revolutionise” the energy efficiency of bothresidential and commercial properties in the UK, with an aim to providing:

• property owners and occupiers with long term energy efficiency savings

• the UK market with 100,000 jobs within five years

• a significant contribution to the UK’s self imposed legally-binding Carbon Budget of reducingthe country’s green house gas emissions by 80% by 2050

The legal framework of the Green Deal was brought into effect in October 2012, through thecommencement of the latest tranche of provisions arising out of the Coalition’s Energy Act 2011,laying the foundation for consumers to enter into a Green Deal Plan from 28 January 2013.

Y

Since the launch of the Government’s flagship Green Deal initiativein February of this year, the issue of energy efficiency in the UK hasbecome the focus of much debate with politicians and industrybodies voicing opinions on the subject. Here, real estate specialistMichael Shuker offers his perspective on the scheme, describing itsimpact on the property market and the potential opportunities forbusinesses.

40


SECTOR FOCUS: A greener Britain?

The added value to a consumer’s property inlight of any energy efficiency modifications islikely to be the cornerstone of how the marketreceives The Green Deal, especially whilstaccess to finance and consumer confidenceremain in a state of limbo.

Furthermore, the issue of getting the GreenDeal works done and the associated chargeswill be topical to landlord and tenants in boththe domestic and commercial markets:

• WorksTenants may wish to incorporate termsinto their leases that will prevent thelandlord from unreasonably refusingconsent to a tenant’s proposed worksby their GDP – currently there is nostatutory restriction on the landlordrefusing consent.

• ChargesThe Green Deal Plan lives with the propertynot the consumer. While a property istenanted the responsibility of paying TheGreen Deal charge rests with the tenantbut where a property is not let the landlordmust step into the tenant’s shoes andmake the re-payments himself.

• DisclosureA landlord must disclose the existence of a Green Deal Plan on its EnergyPerformance Certificate or risk sanctionsimposed by the Secretary of State.

OpportunitiesAs expected with the roll-out of such a largescale and innovative programme, The GreenDeal has opened the door for a range ofcompanies to offer their services to theSecretary of State as Green Deal Providers(“GDPs”). This aims to ensure that The GreenDeal has the necessary public and privatefinance, surveying and construction expertiseand cost collection mechanisms to succeed.

Up-take by the private sector to engage withThe Green Deal has been good with over 30assessors and 80 installers having alreadypassed through the GDP accreditationprocess in Tyne and Wear alone – rightthrough from “one man bands” to FTSE 250industrial giant, Mitie plc.

The North-East’s energy credentials need nointroduction and The Green Deal presents aunique opportunity for the region’s companiesto explore.

ImpactThere is a sense of the unknown whenconsidering the likely impacts that The GreenDeal will have on the real estate market.Mortgage finance, social housing, propertysales and landlord and tenant issues are allareas that are susceptible to change as aresult of its introduction.

We must draw the conclusion that engagingwith The Green Deal going forward is vital.

The implementation of The Green Deal hasserved to reinforce the importance of climatechange and energy consumption issues whilstsimultaneously providing the UK propertymarket with an opportunity to fully embraceenergy efficiency measures. With the PrimeMinister recently stating that the UK is on an“energy efficiency mission” to become themost proficient economy in Europe, thechanges proposed will soon become a realityfor the UK.

Find out how ourreal estate groupcan help you bygetting in touch withMichael Shuker


SECTOR FOCUS: House building: Opening the debate

22

House building: Opening the debate


“The No Stone Unturned Report was recentlypublished by the Rt Hon Lord Heseltine withrecommendations on how to increase UKgrowth. In it, amongst other matters, LordHeseltine proposes that Whitehall funds fortraining, housing and transport be devolvedinto a single funding pot for Local EnterprisePartnerships to administer.

racy Hall, partner and group head forreal estate at Watson Burton, togetherwith David Pridmore, partner and real

estate specialist, speak to an architect,training provider and house builder to discusswhether they think Lord Heseltine’s proposalscould provide the opportunity to make apositive contribution to regional growth.

T Panel: Blake Robinson, Operations Director at 4041, Craig Taylor, DevelopmentDirector at Galliford Try and Roger Maier associate at IDPartnership.

Left to right: Blake Robinson, Roger Maier, Tracey Hall, Craig Taylor and David Pridmore



“The key issues are cost and building housingthat has an element of longevity – a house forlife – which is how it used to be for our parents.We need to move away from the stigma ofthe term ‘affordable’ housing and just call ithousing

Tracy Hall: One North East was hugelyeffective for the North East, unlike other regionaldevelopment agencies. Things have changedwith the move to LEPs and I believe it wouldhave been better if One North East could havefinished what they started. The strength of theLEP will depend very much on how muchenergy and vigour is invested by those involved.

Craig Taylor: One North East did well in theway it assessed the needs of the region as awhole but I feel that the LEP has become veryTyneside centric.

Tracy Hall: Yes, it does appear that the localcouncils have not been working cohesively.People looking to invest need more than theNewcastleGateshead approach and the LEPneeds to look as if it is working for a much largerarea than Newcastle. Maybe RGF will help.

Blake Robinson: The danger is that the LEPuses outdated methods to administer fundingand misses out on the synergy of working withnew methods and new people to deliver change.

Craig Taylor: The challenges for a single potwill be the same as they are for RGF – wherehousing, regeneration and infrastructureschemes are all bidding against each other forfunding. One regional funding pot cannotwork. Our redevelopment scheme inGateshead is still not adequately funded sowe can only undertake small pockets of

regeneration and hope it will act as a catalyst.We submitted a bid for RGF but wereunsuccessful.

Roger Maier: Good point. IDP made anapplication for RGF and it was kicked outstraight away. Construction jobs didn’t seemto meet the funding criteria and RGF is notmeeting the needs of the region as a whole.It’s as if the large teams, who have theresources to put together expensive bids,always win. This must then beg the question,who is the funding really benefiting if the samecontractors or developers keep winning bids?

Tracy Hall: RGF is too prescriptive and it’stoo focused on manufacturing, therefore it

doesn’t meet the economic needs of thewider region.

Blake Robinson: How do these proposalstranslate into wealth generation? There mustbe coordination between building andavailable spend. Without the confidence tospend, projects will start but will stagnate andthis will impact on growth and furtherdevelopment.

Craig Taylor: It’s all about the level andcontext of government intervention. The lastthing we want is projects being delivered andbuildings left standing empty.

”Blake Robinson and Roger Maier



“Craig Taylor and David Pridmore

”



“How do we bridge that gap withlandowners – particularly in the North of England where affordabilityis a significant factor?

Tracy Hall: The green agenda has made itworse – developers need sites suitable foraffordable homes and often the only availablesites are on greenbelt. Even big operators likeBellway have a tough time with planning onthese sites. The planning structure is shocking.

Roger Maier: Land supply, delivery constraintsand site quality are the issues. Brownfieldsites are widely available here but they areexpensive to develop. Greenbelt sites comewith widespread local opposition making italmost impossible to take them forward.Planning consent is therefore complex andcostly to obtain.

Craig Taylor: Many landowners who boughtwhen prices were high are asking too muchtoday. We are currently experiencing 20%lower prices but build costs have increased.This makes it more difficult to protect alreadysqueezed margins. The Localism Agenda hasmade this worse. In Hexham where onlygreenbelt sites are available for affordablehousing, there is huge local opposition andthe margin is not even there to begin with.

Roger Maier: There is a limit to the cost youcan shave off a development because the costis really the land cost.

Craig Taylor: This is where planning authoritieshave a role to play. Durham and Northumberland,the two biggest local authorities in the country,have still not released their core strategies.

Tracy Hall: The whole issue with brownfieldsites though is ‘do people really want to livethere and should government be able todictate where people live?’ There was a reportproduced that Europeans live in cities and weshould adopt this approach here.

Craig Taylor: The European model won’twork in the UK unless you have decentralisedgovernment. Here it is centralised and we areconstantly affected by it in the north.

Tracy Hall: The BBC’s Media City is a case inpoint. BBC staff had this more or less imposedupon them when they were forced to move toSalford Quays.

Complex planning legislation prevails

Blake Robinson: The key issues are costand building housing that has an element oflongevity – a house for life – which is how itused to be for our parents. We need to moveaway from the stigma of the term ‘affordable’housing and just call it housing.

Roger Maier: Land and planning are hamperingdelivery. If we can get a good supply of landreleased there’s a role to be played by smallerbuilders, self-builders and custom-built housing- a small part of the market here, but muchbigger in other parts of Europe. This couldmake a big impact.

Tracy Hall: In North East England there is nopublic housing left, which is a national scandal- and no focus on it at government level. Theprivate sector is supposed to deliver it through‘affordable housing’. Young people’s viewshave changed too. They are happy to rent soshould we not be considering more

developments like Tom Bloxham’s UrbanSplash concept?

Craig Taylor: The market will become morebuoyant again because housing is now beingregarded once more as an asset class. Weare in discussion with a couple of private equityinvestment companies currently. And giventhe high specification of affordable housing,why would you buy a house from a privatedeveloper? I think the affordability of privatehousing will drive the growth of the affordablehomes market.

David Pridmore: The Help to Buy scheme is providing demand in the short term but theissue is how we are going to maintain supply.A lot is to do with people living longer as wellas family break ups, driving demand for morehousing units. So how do we bridge that gapwith landowners – particularly in the North ofEngland where affordability is a significant factor?

So what of the future of housebuilding?

Tracy Hall: Do we think this might help at atime when the banks are still very cautious? Iwould like to think it will help families move upthe ladder into a better quality home and helpfirst time buyers get on the ladder. Throughmy work with Bellway, I am currently seeing asteady level of plot sales coming through inthe Merseyside area on the Help to Buy schemeand the market has a much healthier feel.

Blake Robinson: As the scheme only appliesto new homes, it creates the opportunity forpeople to buy but what will happen to thehomes second time buyers are vacating? I think we’ll see an increase in derelict andempty properties. I also think that housebuilders will inflate the prices now there aregovernment subsidies available.

Roger Maier: Also, will house builders stepup to the mark and increase production? Theywill want to protect their margins.

David Pridmore: I have doubts that the housebuilding industry is going to be able to matchdemand. Are there sufficient plots available todevelop? Because if demand outstrips supply,in normal market conditions, this means theprice goes up.

Tracy Hall: I understand that the fundingarrangements have been set up in such a waythat they take into account the value of theproperty. The Royal Institute of CharteredSurveyors (RICS) has to be satisfied that eachhouse is priced accurately to reflect marketconditions. Funding arrangements and anyincentives offered are such that they won’tchange the value of a property. For me, theissue is whether enforcement will be carriedout properly.

Roger Maier: I also have reservations aboutwhether they will meet the numbers requiredbecause there’s no great incentive for housebuilders to increase their output. If they have a land bank available the larger house builderwill react conservatively to protect margin andposition. For smaller house builders it is nowimpossible to get funding.

David Pridmore: I agree. I have a client whohad a site with planning permission for ninehomes and had to move it on because hecouldn’t get a builder to take it on – the largerfirms are simply not interested in a site this size.

Blake Robinson: This is when the opportunityarises to use young people on apprenticeshipsto build new homes, because it ticks theemployment, regeneration and social reformboxes all at once. I think the LEP needs to bringfunding for training and housing funding togetherto overcome some of the present issues.

Is Help to Buymaking a difference?

SECTOR FOCUS: Capturing that lost online sale


n 2010 the ‘internet economy’ was worth£121bn, more than £2,000 per person,according to researchers at the Boston

Consulting Group, with some 13.5% of allpurchases being made over the internet. Theirfindings also predicted that this figure is set torise to 23% by 2016. This makes onlineretailing big business especially as ourgrowing affection, or could that be addiction,to using mobile devices makes it even easierto shop on line.

Of course with any purchase there is often thechange of heart – the exchange or worst casescenario, the return of goods. When shoppingon the high street, face to face transactionsallow the retailer to encourage another sale,

perhaps by advising the customer that theproduct is available in other sizes and coloursor that it has been reduced in price. But howcan the online retailer respond to basketabandonment, as we refer to it?

Our founder and president, Dominic Edmunds,identified this aspect of online retailing as asizeable issue for all internet businesses.Whilst it was accepted that every site wouldlose a substantial percentage of its customersat the point of purchase, he believed havingthe capability to reach out and remarket tothose customers who abandoned at the lastminute, would present a significant opportunityfor retailers.

I

Gerard Callaghan, director of north east based SaleCycle, aglobal leader in online cart recovery, reviews the art of internetcustomer conversion.

Capturing thatlost online sale

n


SECTOR FOCUS: Capturing that lost online sale

Gerard Callaghan,Director of SaleCycle

@SaleCycle

“In 2010 the ‘interneteconomy’ was worth£121bn, more than£2,000 per person,according to researchersat the Boston ConsultingGroup, with some 13.5%of all purchases beingmade over the internet

Problem or opportunity?Basket abandonment: big problem or bigopportunity? This depends on how you lookat it. With average abandonment rates beingaround 75%, it means that for every £1 spenton a retail site, £3 is abandoned at the pointof purchase.

This figure can vary based on the productsthat are sold on each site. For instance, in thecase of a niche product, abandonment ratesmay be lower than this as potential purchaserschose that site for a specific product. However,for other sites such as hotel operators, theabandonment rate can be higher aspurchasers search for the best deal.

For retailers who successfully retrieve this lostrevenue it is great news and SaleCycle’sstatistics indicate that converting these ‘warm’customers is far easier than trying to enticenew customers to a site.

Using the flare of our highly talented in-houseteam we developed some very advancedsoftware which not only allowed us to dealwith basket abandonment, but also deal withit in volume. To demonstrate the extent of oursoftware capacity imagine if you will, morethan 400 of the largest ecommerce sites inthe world operating on the busiest days of thee-retailing calendar such as Cyber Monday in the run up to Christmas - and you may geta clearer picture about the amount of datainvolved.

Sophisticatedprogramme modellingWorking in real time, SaleCycle’s softwareallows a review of all the transactions thathave taken place on the sites including thosethat complete successfully resulting in a sale,

and those that for whatever reason, don’t.Based on sophisticated criteria and a set oftools SaleCyle has developed, we thenremarket products to those who abandoned,usually via email.

Thanks to the level of data SaleCyle is able tocapture we know that, when appointed, weare able to achieve consistent results across a diverse range of industries and producttypes and typically increase revenues for ourcustomers by up to 8%. This figure is mirroredacross each of the currencies and countries inwhich the company operates.

Whilst SaleCycle has some competitors, theyare few and far between. Since its inceptionthree years ago, after facing some initial nerve-wracking challenges of a technical nature, wehave been able to build an impressive technicalsolution and infrastructure which has been acomplex process. This gave us theconfidence to really push for growth.

What next?SaleCycle currently employs 35 staff fromoffices in the United States, Singapore,Europe and the Nordics. We have plans togenerate revenues over £3.5million this year

and further expand our operations by recruitinganother 20 employees.

Industry data suggests that the remarketingsector is worth in the region of $36bn per yearand presently only 14% of businesses haveremarketing solutions in place. This presentssignificant scope and opportunities for SaleCyleto increase its market share further as wecontinue to push forward to enter new territoriesand win new clients.

With the aim of making the most of the datawe capture, we have some exciting newbusiness development ideas in the pipeline.These will allow us to provide an additionalsuite of services to online retailers that will addvalue to their business and substance to theirbottom line results and at the same time ensurethat we retain our pole position in the online cartrecovery market.

SECTOR FOCUS: Bright outlook for tech startups

28

Bright outlook fortech startups


pperatinngg iinnn aa hhighhlly ccoommppetiittivve, eevooluuttioonaarryy mmmaarrkkkeeeetttt,,, teecchnoollogystartup busineesses ofttff een ffiinnd iitt diffff icuult tto sstandd outt fromm ttheeccrrroowwdd.. WWhhiillsst aa rreecceent reppoorrtt bbyy tthhee SScciennccee andd TTeeTTT cchhnnologyyySelect Committee warns tthatt the governmmentt iiss ffaaiillingg ttoo seccuurefffuunndddiiinngg ffooorrr ttteecch sttaarrrtttuuupppss, the NNoorrtthh EEaaasssttt’’’ss assssoocciiaatttiiiooonnn wwwiitth themcoonnttiinnuues to ggrrooww. Heerre, wee speak too ccoorppoorraattee ffiinaanncce specciiaalliissttWWilliam MMcCullough and ask him why the North East has come tohave such aa vibrant and poppular startup commmuunity and what heconsiders to bbe kkey priiorriittiiees ffoorr tthheesee bbuussiinneesssseess.



The North East can offer technologystartups the opportunity to benefit fromthe experience of expert mentors

Perhaps one of the most obvious attractionsfor those considering starting out in thetechnology sector is access to funding.

Debt and equity finance from £1,000 to £1.25mis accessible under the £125m Finance forBusiness North East programme. This isavailable for SMEs based in, or relocating to, the North East. The programme is divided

into 7 funds and is financed by the EuropeanRegional Development Fund, the EuropeanInvestment Bank and the UK government.

There are also numerous venture capital funds,syndicated private equity investors andbusiness angel networks which are locatedand actively investing in the North East.

WWhhaatt ddoo yyoouu ttthhink mmaaaakkkkeeess tthhee NNNoorrrttthh EEEaaasssttssoo aattttttrraaccttiivvee for tech startupss??Q

Yes, being located in the North East gives these businesses the opportunity to connect withand utilise universities through projects such as DigitalCity, which collaborates with TeessideUniversity and Newcastle Science City, which works with Newcastle University. Both projectsoffer business support to early stage businesses.

The North East can also offer technology startups the opportunity to benefit from theexperience of expert mentors through the likes of the ignite100 programme. Now in its thirdyear, ignite100 is a mentor-led accelerator programme that provides startup capital, mentoringand office space in a 14-week intensive programme. Many of the founders, who come from theUK and abroad, that complete the ignite100 programme choose to stay in the North East andadd to the close knit startup community.

Another key resource available to technology startups in the North East is the access torelatively inexpensive residential and commercial property when compared with othertechnology startup hotspots such as Cambridge and London. An example of this is theNETPark Incubator in County Durham which offers a mix of office, laboratory and clean roomspace on a “pay as you grow” basis.

Do you thinnkklocatioonn playsaa rroollee?

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protect and exploit their ideas.A clear position regarding“who owns what” in termsof intellectual propertrr y shouldbe towards the top of anystartrr up’s priority list



Many businesses seek funding at an earlystage. There are a variety of options availablefrom simple bank loans and overdrafts throughto investment by venture capitalists or privateequity houses. When considering investment,startups need to think very carefully about theconditions which come with such funding. For example, a bank might require personalguarantees from the directors and equityinvestors often have conditions that requiremore on-going contact with them.

One thing to note is that the startup founderswill need to accept that they have to sacrificesome of their equity in their business to secureinvestment. This could be by way of a straightequity investment or by way of a convertibleloan which can convert to equity upon certain

triggers. Investors also frequently insist on anelement of oversight of the day-to-day runningof the business. They may require an observerto sit on the board of directors or alternativelymay insist on the appointment of an investordirector of its own choosing. Either way, afinancier often stipulates that the businesscannot take certain decisions without theconsent of that investor as a condition of the agreement. A new lender should be seen as a new partner in the business.

The importance of negotiating suitableinvestment terms cannot be underestimated –it is a decision that the business may have tolive with for a long time.

WWWhhhhaat are the priorities for thesecompppaaaanniies froommm aaa llleegggaaalll pppeeeerrrsssppppeeeccctttiive?Q

Find out how ourtechnology group can help you by getting in touch withWilliam McCullough


It is essential that startups protect and exploittheir ideas. A clear position regarding “whoowns what” in terms of intellectual propertyshould be towards the top of any startup’spriority list especially if work is prepared byconsultants on its behalf (as is often the casewith App development or website design).Another consideration is whether any staff,customers and suppliers should enter intoconfidentiality agreements to protect thecompany’s secrets. Founders often agree toassign to the company all of their own IP thatrelates to the business at the outset. Thisensures that in the event of a dispute betweenthe founders, the company will retain the IP itneeds to continue trading.

The exploitation of IT for technology startupsis, of course, essential. However, getting thebasics in place is not always obvious.Startups that utilise social media functionality

or user participation need to carefully considerthe ownership of users’ data and the terms on which such data is collected. Ensuring that the appropriate website terms of use andprivacy policy are in place might not immediatelyseem to be a top priority. However, theseterms can govern (and limit) a business’sability to commercialise user data and theirimportance should not be underestimated.

What should tech startups considerto protect their business? Q

REGIONAL FOCUS: Ambassadors for Leeds City Region

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Ambassadorsfor Leeds CityRegion


Mark Goldstone, Head of Business Representation & Policy atLeeds, York & North Yorkshire Chamber of Commerce, acts as thevoice of regional businesses in relaying their views to key decisionmakers. Here, Mark speaks to Briefly Legal to explain what makesthe area special as Leeds city region takes centre stage.



The ingredients for exportgrowth truly exist in theLeeds City Region. We havehigh value, high quality andinnovative manufacturing,world leading service sectorcompanies and a wealth ofexpertise and support tohelp new and existingexporters

Investment in the Leeds City RegionThe announcement by the Government in late 2012 that the Leeds City Region will benefit fromdevolved funding through City Deal looks set to bring forward strategic infrastructure projectsthrough the creation of a £1bn transport investment fund. Likewise the creation of a further£400m economic development fund will assist in getting stalled development projects movingagain. Both of these initiatives will help to create the 21st century infrastructure required bymodern successful economies in turn creating business opportunities during their constructionand on-going economic improvements upon completion. Add to this a new strategic approachto inward investment led by Leeds and Partners means there are plenty of opportunities to dobusiness with the city region.

he Leeds City Region is a functionaleconomic area, defined by the way our businesses operate and our residents

live their lives. It is the largest city region in the UK, home to 3 million people and over100,000 businesses, in turn generating 4% ofthe UK’s economic output. It is home to thelargest manufacturing base in the UK and thesecond largest base for financial and legalservices behind London. The region has astrong research base supported by nineuniversities with great examples of collaborationbetween business and higher education.Whilst the region is by no means immune toexternal economic forces it is this diversitywhich has stood it well over the last five years.

T





World Trade from YorkshireMuch has been made by the governmentabout the need to get more companies in theUK exporting. Whilst the Chamber recognisesthat for some businesses this is simply not on their agenda we do support the view that international markets offer significantopportunities for companies. In fact Chamberresearch shows that companies that dobusiness internationally are more innovative,more productive and more resilient than thosethat don’t. 67% of exporting companies in theLeeds City Region have seen their turnoverreturn to or exceed pre-recession levelsversus 53% of non-exporters (a copy of thisresearch entitled ‘Beyond Borders’ can befound on the Chamber’s website).

HM Treasury statistics point to the fact thatYorkshire & Humber could do better withregards to the value of exported goods andservices in comparison to fellow Englishregions. Furthermore export markets from the Yorkshire region have traditionally been to the USA and Europe, with six of our top ten markets within the Eurozone itself (notdissimilar to the rest of the UK). Whilst theUnited States appears to have turned acorner following last minute negotiationsearlier in the year to stave off the ‘Fiscal cliff’,troubles in the Euro zone rumble on and show no real sign of abating in the short term.

Fortunately there is good evidence thatcompanies in the Leeds City Region arelooking outside their traditional overseasmarkets with our international departmentreporting increased interest in places likeChina, Turkey, India and the Middle East since the start of the recession in 2008.

Engineered products still remain the numberone export out of the Leeds City Region in

particular supplying the power generation &distribution, mining and oil & gas industries.The region is still very strong in textiles andchemicals exports. Additionally there hasbeen a noticeable increase in the export ofscientific / healthcare products over the lastthree years. The region has also seen muchservice sector export activity taking place.Financial and legal services are well placed to serve international markets from the LeedsCity Region; likewise there is a thrivingInformation Communication Technology (ICT) and digital / creative sector which isdoing great work overseas.

Our latest quarterly economic survey (releasedApril 2013) points to further increases inexports by local businesses, especially servicesector businesses. Indeed we have uncoveredsome great examples of companies takingadvantage of opportunities generated throughtheir websites, highlighting the importance of getting found in the digital world. This initself presents fantastic opportunities for thelegal sector as companies look to protect their intellectual property overseas and with asignificant proportion of international contractsdrafted under English law this region has theeco-system to support business growth.

Further assistance has also been madeavailable through the creation of the region’s ‘We are international’ campaignwww.exportnetwork.co.uk. This campaignspearheaded by Chamber International, UKTrade & Investment and the region’s LocalEnterprise Partnership, aims to add £2.6billion to the local economy by increasing thenumber of businesses selling their goods orservices overseas.

Global ConnectivityThere is also good news with therecommencement of flights by British Airways(BA) between Leeds-Bradford InternationalAirport and the rest of the world via HeathrowTerminal 5. One of this Chamber’s long

standing campaigns has been to encouragemore international trade in our regionemphasising the need for easy access togrowth markets. As a result, we are delightedthat our vision has now become a reality.Connection to the UK’s only hub airport addsmore choice for the global business travellerbut just as important it also makes it easier for overseas visitors to get to Yorkshire.

The ingredients for export growth truly existin the Leeds City Region. We have high value,high quality and innovative manufacturing,world leading service sector companies and a wealth of expertise and support to help newand existing exporters. Direct connectivity to world markets via Heathrow from Leeds-Bradford International Airport simply adds to this proposition.

The futureThis year has already seen the opening of thelargest new retail development in Europe formany years and at 1msq’ ft Trinity Leeds hastransformed the city centre. In July the longawaited Leeds Arena opens its doors with aunique design creating Europe’s only 12,500seat super-theatre. This will be followed byfurther, major retail development as John Lewiscomes to the city in 2016. Last but not leastthree global sporting extravaganzas will behosted in the region: the rugby league andrugby union world cups in 2013 and 2015and the spectacular Tour de France GrandDepart in 2014. With the eyes of the world on Leeds I am confident that business willbenefit as the region’s profile goes global.

Mark GoldstoneHead of BusinessRepresentation &Policy at Leeds, York& North YorkshireChamber ofCommerce

@Mark_Goldstone

67%of exporting companies in the Leeds City Region have seen their turnover

return to or exceed pre-recession levels

versus 53% of non-exporters

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FIRM FOCUS: Planning for success

36

Planning forsuccess


or any business with aspirations oflong term sustainability and growth,forward planning is a pre-requisite to

achieve success. An in-depth knowledge ofyour target market, clearly defined aims andobjectives and a logical framework withinwhich the business can thrive are all essentialingredients in the formation of a strongcommercial entity.

So how is this achieved? Through a forwardthinking progressive vision that aligns thecapabilities of your business with the needs of the markets and sectors in which youoperate. For Watson Burton, this approachhas focussed our firm on identifying ourstrengths and tailoring our services to securefurther opportunities in those markets.Building on this, we have initiated plans toidentify where we can add additional value to our existing clients and, to identify otherbusinesses who we may be able to assist bydemonstrating our credentials in three coremarkets: house building, education andenergy and utilities.

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FIRM FOCUS: Planning for success

Common goals It is essential to be strategic in your planning,establishing goals and outlining activities atleast three years ahead of time. When doingso, it is important to consider both the internaland external environments that affect yourbusiness with the aim of implementing astructured approach to delivering continuousgrowth and improvement throughout thatperiod of time.

As a firm, we seize every available opportunityto revisit our strategy to ensure that ourbusiness is performing to its full potential.Our latest strategic planning activities,completed to coincide with the beginning ofour new financial year, have resulted in theimplementation of a key account managementinitiative for current clients and a revisedapproach to targeting new opportunitiesbetween now and 2016. This approachrecognises the value of executing an on-goingplanning process which is nimble andresponsive to the changing needs in themarket and how in turn those demands reflectthe overall political, social and economiccharacteristics of the wider economy.

Adapting to changeAt the centre of a successful business planthere should be an informed appraisal ofcompetitor activity and the wider tradingconditions prevailing in the market in whichyour business operates. For a professionalservices firm like ours, significant challengeshave emerged since the global economiccrisis in 2007. The legal sector in particularhas undergone unprecedented levels ofchange with client businesses across allcommercial and industrial sectors makingmoves to protect their profit margins. Formany businesses, the choice was made toeither manage legal services in-house or takemore risks by foregoing external legal adviceon more “routine” legal issues.

Not surprisingly, this has had an enormousimpact on many firms in the legal sector,faced with the challenge of balancing whathas traditionally been a high fixed costbusiness model with a substantially decliningincome. For others like us, these changeshave signposted an opportunity to take alonger term strategic view of the market aswe restructured our business with a key focuson reducing overheads and more importantly,debt. The strategy worked. Six years later,our firm has demonstrated stability inturnover and an increase in profit. As aresult, national clients have been attractedto this pragmatic and far sighted approachto business planning, perhaps recognisingthat our unique position, having gonethrough the process ourselves, provides avaluable insight into addressing some of thechallenges they may face.

Find out how Watson Burton can help your business by getting in touch withPatrick Harwood


FIRM FOCUS: 60 seconds with… Richard Palmer

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60 seconds with…

Richard Palmer


What is the best jobyou’ve ever had?

As I have worked at Watson Burton forover two decades, I would have to saythis one. I have, however, had many rolesover the years and despite all the challengesit throws up, my current role as an ownerof the business and relationship partnerfor a number of great clients, plays to mystrengths. I am a people person who feelsa great responsibility to the people I workwith (whether colleagues or clients) andthere is a great sense of fulfilment when Ideliver on my commitments to them.

How would yourcolleagues describe you?

I would like to think that they see me assomeone who leads by example, who isfiercely (but not blindly) loyal with goodjudgement and instincts. I always try to’be inclusive and fair with people but atthe same time, if something needs to bedone, I will not shirk from doing it. I wouldalways prefer people to understand why a decision has been made, even if they do not agree with it.

What is the best decision you have ever made? In business terms, the decision to become one of the principal owners in the firm I haveworked for all of my professional life must rank as the most important. Having done so at atime when the country was going into the deepest recession in recent times has added tothe challenge. I have learnt so much about myself, my colleagues and my business and theopportunity is there to be successful and to leave something in years to come that I amextremely proud of.

You are in a meeting with someone for the first timein a busy place – how would they recognise you?

In my mind’s eye, they will see a 6 foot four, sharply dressed male with a friendly face and awelcoming smile. Whether others agree with the sharply dressed part is another matter... !

Who or what has mostinspired you in yourprofessional life?

I would say my father, who is not a lawyerbut instead worked in the manufacturingindustry. He worked his way up in thecompany he worked for and wassuccessful in business whilst maintaining a focus on his family. That is a difficultbalance to achieve but he did it well. I know that he faced a number of challengesin his career and he demonstrated to methat any difficult problem does have asolution - you just have to work at it.

Watson Burton’s professions and insurance group is nationallyrecognised for its high-levelexpertise. Here, we speak topartner Richard Palmer to discusshis influences and interests.


FIRM FOCUS: 60 seconds with… Richard Palmer

“Garden design is another interest as well asbeing a chef (I have had experience of runninga couple of pop up restaurants but wouldn’twant to do that day in day out)

What do you like mostabout being a lawyer?

Being presented with a problem (as alitigator, that is usually the way) and workingwith my clients and colleagues to producea solution that works. To do that effectively,one needs to listen to what the client islooking to achieve (many lawyers fail to do this), to use your experience tosuggest ways forward, to identify theobstacles and opportunities ahead so that a clear strategy and cost can beagreed and then to deliver, whilst at thesame time thinking several steps ahead.Working with colleagues and the client asa team to achieve a successful out comeis hugely rewarding.

If you weren’t a lawyerwhat would you chooseto do as a career?

Something involving design. I did considerarchitecture initially alongside law but Inow represent architects and so I havegot the best of both worlds. Garden designis another interest as well as being a chef(I have had experience of running a coupleof pop up restaurants but wouldn’t wantto do that day in day out). In the fantasyworld, a musician (I do write and recordmusic) or a football manager (I coach ayouth team but I am yet to receive a requestto make the step up to the PremierLeague!)

Which word or phrase do you most overuse?

My colleagues would no doubt say“strategy” (as in we need to create one) or “comfort zone (as in the need to moveoutside of one). Both are important inbeing successful in law and business - a clear path to achieve what is neededand a real pushing of the boundaries toget the best out of those entrusted withdelivering that strategy.

If you were stuck on adesert island and wereallowed to take threeessential items, what would they be?

Taking into account my interests, anacoustic guitar, a frying pan and a sketchpad. I would have taken an iPad butwithout a charger and a power source,that would be of limited use!

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WATSON BURTON LLPNewcastle - Leeds - London

0845 901 2100watsonburton.com

This is a Carbon Balanced Publication. The full carbonimpact of this document has been offset by the conservationof endangered tropical rainforest in association with theWorld Land Trust.

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Briefly Legal Summer 2013