A turning tide

January 3, 2020

Coal mining and shipbuilding were once the economic dynamo of the North East, providing jobs for thousands and fuelling the region’s standing as an industrial powerhouse. Today’s landscape carries a markedly different complexion, but by channelling the inventive spirit and ambitions of its predecessors, the region remains a reputed business hub. Moreover, the area is garnering an increasing status as a North Shoring hotspot, with companies using the North East as a base to grow operations away from the costs and congestion of the South East. Steven Hugill looks at what the process means and how an increasingly turning tide holds potential for significant job creation in our region

The North East’s waterways carry a distinguished association with heavy industry.

From coal-carrying keels and colliers to colossal ocean liners, tankers, aircraft carriers and destroyers fashioned in the region’s shipyards, the area’s rivers were long venerated as key channels of commerce that defined the North East globally.

Today, however, the scene is somewhat different.

Where water-borne behemoths once neighboured densely packed terraced streets, sea changes in traditional industry mean the region’s currents stir with less activity.

Yet while the eras of old may have faded, the North East’s business environment remains strong, helped in no small part by an increasingly burgeoning professional services sector.

Stimulated by a rise in a process known as North Shoring, the sector is metaphorically turning the tide on perceptions around doing business in the North East.

First coined by consultant Robert Gogel, North Shoring describes the process of shifting work from the south of the country to the north, in order to access skills and office space at a fraction of the cost.

Long-standing flagbearers in the region include financial service firms EY and Deloitte, which both run large operations out of Newcastle and supplement substantial workforce numbers with training schemes to nurture their teams of tomorrow.

EY runs its national financial services business out of Newcastle, and spent £8 million in 2018 to help create 65,000sq ft of City Gate office space.

Deloitte employs 250 in its Trinity Gardens office, with 140 working across standard services that include audit, tax and financial advisory operations, and 110 in four Centres of Excellence.

Three of the latter mentioned hubs work on specific parts of the audit process, with the fourth providing a specialist private client tax advice service.

Both firms are unequivocal about the area’s stature as a commercial environment.

“The North East is a fantastic region in which to live and work,” says Michael Scoular, office managing partner for EY in Newcastle.

“It continues to attract the right level of skills and financial investment – which is illustrated by the number of businesses, especially digital businesses, that choose to base themselves here – and EY is no exception.

“We have seen year-on-year growth in the North East and increased our headcount by over 15 per cent in the last financial year to more than 750 people.

“We’ve run a successful apprenticeship scheme in the North East for a number of years and recently welcomed a cohort of 35 to our Newcastle office – two-thirds more than last year – with many of these making the move North from as far afield as London and the Home Counties.”

The positivity is echoed by Stephen Hall, office senior partner at Deloitte in Newcastle. He says the firm’s Centres of Excellence are a strong indicator of the region’s qualities as a North Shoring base.

“The placement of the Centres of Excellence was carefully considered, with Newcastle winning the work on the merit of our skills base in the region,” says Stephen.

“The audit process Centres of Excellence are a great example of North Shoring – many other firms have located these types of processes overseas.

“Through our forebear firms, we have had an office in Newcastle since the 19th Century and it’s important for Deloitte to have a firm presence in the North East and play its part in the vibrant business community.

“As a firm, we have an active graduate recruitment programme hiring more than 1500 students per year from schools and undergraduate entry routes into 22 office locations across the UK – and 13 started in Newcastle this year.”

International infrastructure operator Balfour Beatty was at the forefront of North Shoring, opening a shared services centre on Newcastle’s Quorum Business Park back in 2010 to oversee payroll, accounting and supply chain management.

More recently, global law firm Norton Rose Fulbright launched a Newcastle legal process hub – creating 100 jobs – which works on digital improvements to operations and acts as a national graduate training site.

Additionally, London legal operator Clifford Chance made the region its UK home outside the capital in 2018, when it acquired Gosforth’s Carillion Advice Services (CAS).

Securing an initial 60 paralegal jobs, with further growth plans subsequently announced, the firm said its decision to North Shore would build on work carried out by third parties and an Indian support centre.

Latterly, Weightmans added its name to the legal roster when it bought Newcastle-based Watson Burton LLP in October, with bosses unveiling plans to develop core work – such as insurance and public sector support – across the region.

What they all show, says Jen Hartley, director at Invest Newcastle – the body that helps firms locate, expand and grow in the city – is an increasing realisation from companies that business can be done outside the London bubble, with the North East particularly fertile ground for expansion.

“It is all about changing perceptions,” says Jen, “and we have the demand and the space to house the companies here.

“We have seen a huge boom in legal tech and fintech is growing too, while outsourced IT has always been a big one.”

Jen’s allusion to opportunities in the region is backed by Angus Kidd, a former managing director of Credit Suisse who has more than 15 years’ experience in running large delivery centres for the financial services company in Singapore, Poland, India and North Carolina.

These bases employ thousands of workers, providing support across areas such as technology, finance, risk management, legal and audit, and Angus – who is passing his expertise on to Invest Newcastle – says the North East has scope for similar success.

“I see an opportunity to create another 10,000 jobs minimum in the shared delivery service industry in the North East; all the things you need for success are here,” he says.

“You need a talent pool, good transport links and real estate, local authority support and price point.

“I’ve had those five things in four other countries, and it’s been successful, so I see no reason why we can’t do it here as well.

“It’s about getting a community together, getting a collective voice and making sure we are attracting the right investors,” adds Angus, who is also a board member at Dynamo North East, the organisation working to promote the region as a hotspot for IT and digital business.

Jen says achieving such growth will be helped by using existing companies’ commitments as a barometer for the region’s strength as a commercial hub.

“We worked with Deloitte, which fought against other UK locations to house a project here, and Norton Rose Fulbright is a perfect example of the boom in the number of global law firms coming to the city.

“We supported the latter quite a lot and they’re up to 150 people now.

“They built their base from scratch, with the reason being that they had access to the right talent, and they are led by office manager Kiran Radhakrishnan, who studied in the city,” continues Jen.

“Tax and insurance are big areas, but we are also seeing a lot of banks showing interest further North.

“We’ve got Durham’s Atom Bank, and there is a real finance base starting to show its head – in fact, we’ve just landed a London-headquartered company called Singletrack, which is opening a support centre in Newcastle.

“Such growth plays into the wider North East ecosystem because we also have the only national audit office outside of London and have HM Revenue and Customs’ digital hub, which is a main UK base working on tax and self assessments in Longbenton,” adds Jen.

Highlighting lower office costs, companies’ access to the ambitious and highly-skilled graduates rolling off the North East production line, and the more favourable cost of living for staff in the region, Jen says firms’ arrival in the North East is also luring back former natives.

“When you look at our property costs, in terms of offices, we are a lot lower than London, and if you’re a company taking several hundred thousand square foot, it quickly becomes a fair reduction,” she says.

“But property costs aren’t the only thing; it is the access to skills that are driving the projects these days.

“Furthermore, the roles exist here now; if you want to be a lawyer, a specialist tax accountant or an actuary, or you wish to work in the tech sector, you can get those roles.

“We are also seeing a lot of very experienced hires moving back.

“For workers, North Shoring offers an alternative to raising a family around London, for example, which is expensive.

“Also, the average commute time here is about 23/24 minutes, whereas in the capital it can be a few hours a day.

“In the North East, people know they will have access to schools, hospitals and the nightlife, all alongside the knowledge that if they need to work in London, they’re not too far away on the train.”

Jen’s views are supported by EY’s Michael, who says the area presents an attractive all-round package.

“The North East offers businesses access to the right people with the right skills, and it isn’t surprising to me that the decision was made to base our national financial services business here,” he says.

“Not only does the North East have a vibrant business community, it also has some of the finest universities in the UK and both factors combine to attract a consistently high standard of apprentices and graduates to the region.

“These young professionals are drawn to Newcastle, and other cities across the North East, not just by the variety of opportunities and favourable work-life balance, but also by its rich heritage and social, cultural and sporting attractions.”

The office senior partner at Deloitte Newcastle concurs. “People are choosing to work in the North East for a better quality of life and cost of living,” “We are attracting high-quality school leavers, part or fully-qualified people and it helps the talent pool that there is a cluster of large companies located in the North East doing the same,” says Stephen.

“This method of entry into the firm is a great springboard to other areas of the business.” Jonathan Walker, assistant director of policy at the North East England Chamber of Commerce, agrees, saying the region’s leisure portfolio makes it as desirable a place as anywhere in the country.

“We know we have a fantastic workforce and business environment, with skilled, loyal employees who excel in what they produce, and we definitely punch above our weight in terms of attracting major investment, as our offer is so cost-effective,” he says.

“The work-life balance is also outstanding, with a great range of environments, from rural landscapes to bustling cities, helping attract investment and jobs.”

Jen says Newcastle is also benefiting from increased awareness of its position as a hotbed for innovation and its reputation as a collaborative environment where academia and industry unite.

Nowhere is this better highlighted than at the flagship Helix development, which is rising quickly on land that was once a Scottish and Newcastle Brewery bottling site.

Led by Newcastle City Council, Newcastle University and investor Legal & General, Helix features dedicated hubs focused on areas such as life sciences, future learning and digital technology, which all sit alongside Grade A office space.

It is also home to The Catalyst, a groundbreaking building housing the UK’s National Innovation Centre for Ageing and the National Innovation Centre for Data, which, respectively, will help drive societal improvements and provide digital support to bolster commercial organisations’ growth.

“The assets we have here are helping with North Shoring,” says Jen.“Imagine if you’re an investment bank in a prime part of the city co-located with however many PhD students all studying big data analytics.

“Add in the North Atlantic Loop (a new generation of advanced fibre optic networking), which will mean data speeds from here to New York are quicker London’s, and that is huge in terms of financial trading.

“We have so much Grade A office new build coming on,” continues Jen, “and the interest in The Lumen at Helix [which will provide more than 100,000sq ft business space] gives great confidence to Legal & General.

“But we don’t just have Helix,” she adds.

“We also have Stephenson Quarter, which has the University Technical College, the hotel and further exciting plans, and East Pilgrim Street with the Bank House development too.

“These are very exciting times.”

Invest Newcastle
www.investnewcastle.com
@Tynetoinvest

EY
www.ey.com
@EYnews

Deloitte
www2.deloitte.com/uk
@DeloitteUK

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