Business Insight

Wednesday June 6 2012

United he standsJim O’Neill on his city and the worldPage eight

Bending the future of manufacturing What graphene means to youPage four

Manchester Forum Business leaders discuss growthPage six

Wednesday June 6 2012 | the times

Business Insight2

Encouraging growth in ManchesterIn this issue we focus on Manchester after hosting a successful forum of leading business-people in the city. The discussion focused on the factors needed to boost economic growth. There was a feeling that Government had to allow cities the freedom to create their own growth strategies to tackle the reality on the ground.

We also profile Jim O’Neill, the chair of Goldman Sachs Asset Management. He is a proud Mancunian who sees great promise in the global reach of his city — and its football clubs. He tells us: “I believe the new leader in China is a football fan, so what better way to introduce your city than through a shared interest in football?”

Further afield, we also look at a biotechnology firm based at the Daresbury Science and Innovation Campus, which has just taken over a Californian company in a £3.7 million deal. This could pave the way for a future flotation.

Welcome

Bleak picture shows need for affordable homes

Is there anyone out there who remem-bers real manufacturing in the North? The time when our factories used to produce widgets by the million and sell them to appreciative international

markets now seems about as distant as the Industrial Revolution itself.

What changed all this was when the boys in the London bubble decided that our future lay in financial services in gen-eral and banks in particular, ignoring the fact that manufacturing as a percentage of gross domestic product has always been greater in the North than the national av-erage.

True, there have been various desperate attempts to convey the message via official channels that manufacturing of the nuts-and-bolts kind is seriously on the up once again – but, from a base that had dwindled significantly, that isn’t difficult to do.

The reality is that whereas Germany continued to invest heavily in machinery – and the technology to make it world-beating – the available pot for Northern manufacturing reduced considerably.

Juergen Maier, who heads Siemens In-dustry Sector in the UK and who is based in Manchester, has often said that the key difference between the buoyant manufac-turing sector in Germany and its poorer

cousin in the UK comes down simply to lack of investment.

Of course the Coalition will point to what’s happening in the motor industry – to Jaguar Land Rover in Liverpool or to the Japanese car plants in the North East – as a rebuttal. Yet these are examples of what happens when investment is made available, not when it is not.

The problem now is that Northern companies may be sitting on billions in funds, but they are increasingly nervous about spending it. I can reveal, however, that there is now a potential reason to in-vest in what’s left of our manufacturing sector and even to lay the foundations for future prosperity.

It comes in the form of a Nobel Prize-winning miracle material, graphene. Dis-covered at the University of Manchester, graphene has the potential to regenerate not only that city but the entire North – eventually.

The thinnest and strongest material known to science (3 million sheets would be just 1mm thick, and it is reputedly 200 times stronger than structural steel), gra-phene is also the most conductive. About 1 per cent of graphene mixed into plastic would convert it into an electrical conduc-tor – see the article on page ten.

Graphene not only has the potential to transform Greater Manchester just as sili-con did for San Jose, but also drag in Liv-erpool, Leeds, Newcastle and Sheffield as part of “Graphene Valley”, as previously happened with Silicon Valley in Northern California. Geography alone will ensure that graphene-related companies will spring up throughout the North.

Yet the real significance lies not just in company start-ups, but in what graphene can offer to what is left of manufactur-ing in the North in helping to regain the competitive edge it once had. Imagine a scenario where regional companies could actually manufacture components which are lighter, stronger and more bendable than those of their rivals – wow!

Ivan Buckley, project manager at the University of Manchester’s National Gra-phene Institute, is eager to work with manufacturing firms in the North, first to prove, then to exploit graphene’s full range of potential applications. And he is convinced that this scientific break-through could have a serious impact on major industries across the North.

“Graphene has the potential to become the next ‘disruptive’ technology due to its ability to offer step-change improvements over existing materials,” Mr Buckley says. “While many of its characteristics are unique and superior to other materials, it is the combination of these properties that has given graphene the title of ‘mira-cle material’ of the 21st century.”

He details a range of specific applica-tions being explored for graphene that could impact on the region, including:• The potential to manufacture compo-

nents with higher strength-to-weight ratios for such uses as windmill blades (currently being manufactured on a large scale in the North East), or air-craft components (BAE in Lancashire).

Bendy lifeline for manufacturing in the North?

Inside ...Flexible futureGraphene and you Page 4Manchester forumCity’s leaders speak Page 6Jim O’NeillUnited fan and economist Page 8

Mike Cowleyat large

How the world’s strongest, lightest, most bendable miracle material might offer just that ... and see off the Germans

First PersonBrian Cronin

Commercial viewpoint

The Times Business Insight reaches more business people in the North of England than any other quality or regional newspaper. Indeed, with 212,000 readers* and reaching 20% of the business community** there is no better place to be seen. *Source NRS January - December 2011 **Source BBS 2011

To advertise in the next North of England edition of Business insight:Freephone 0800 027 0403or contact: stuart@timesnorth.co.uk

Housing is vital to the wider economy. While this is true throughout the country, it is important to recognise the unique issues affecting hous-

ing and the economy in the North, with the region desperately needing a strong social housing sector to help economic development.

Housing waiting lists in the North have been growing faster than the rest of England over the past five years. In the North West alone, 250,000 households are on the waiting list for an affordable home. Unemployment is through the roof and people are struggling to make ends meet. The North is taking a dispro-portionate hit from public spending cuts.

The gap between the haves and the have nots will continue to widen, as will the di-vide between North and South.

All this paints a bleak picture. How-ever, the North has huge potential for growth. To stimulate this we must provide new social and affordable homes to help many individuals and families struggling to get on the housing market and unable to afford private sector rent. Investing in housebuilding is the most effective way of stimulating economic growth. Not only will it provide homes for those people stuck on waiting lists, but it will create jobs and support businesses.

However, the housing sector is about more than bricks and mortar. We must invest in people and in neighbourhoods. We want to transform lives and commu-nities.

Our residents and customers are the reason we exist. We want to ensure the financial wellbeing of our customers. We want to help improve health. We want to give young people a sense of purpose and we want to create opportunities for people to help themselves.

Across England, housing associations provide more than two million homes for more than five million people. How-ever, the huge range of additional ser-vices which support and add value to the neighbourhoods where they work is all too often overlooked. Housing associa-tions are making local decisions, working directly with residents to provide servic-es. Housing associations are involved in media production, retail, money advice, work clubs, credit unions, health centres and much more. We work with partners from the private and public sector to de-liver a staggering range of services, ben-efiting individuals and investing locally and regionally.

For many years, housing associations have been quietly doing all this fantastic work. They have to become much better at telling their own story – to residents, to local politicians, to the local media and collectively to the public at large. The work of housing associations di-rectly or indirectly affects everyone in the country. But all too often we hear of negative stories regarding antisocial

Business Insightthe times | Wednesday June 6 2012 3

Bleak picture shows need for affordable homes

Bendy lifeline for manufacturing in the North?It has been found that adding gra-phene to epoxy composites may result in stronger/stiffer components than epoxy using similar weight of carbon nanotubes. Graphene appears to bond better to polymers in the epoxy, allow-ing a more effective coupling.

• Transistors that operate at higher frequency. The ability to build high-frequency transistors with graphene is made possible because of the higher speed at which electrons in graphene move compared to electrons in silicon. Researchers are also developing lithog-raphy techniques that can be used to fabricate integrated circuits based on graphene.

• Lower-cost display screens in mobile devices. Researchers have found that graphene can replace indium-based electrodes in organic light-emitting di-odes (OLED). These diodes are used in electronic device display screens which require low power consumption. The use of graphene instead of indium not only reduces the cost but eliminates the use of metals in the OLED, which may make devices easier to recycle.

• The development of practical hydro-gen-fuelled cars. Researchers have pre-pared graphene layers to increase the binding energy of hydrogen to the gra-phene surface in a fuel tank, resulting in a higher amount of hydrogen storage and therefore a lighter weight fuel tank.

• Sensors to diagnose diseases. These sensors are based on graphene’s large surface area and the fact that mole-cules sensitive to particular diseases can attach to the carbon atoms in gra-phene. Researchers have found that graphene, strands of DNA and fluo-rescent molecules can be combined to diagnose diseases. A sensor is formed by attaching fluorescent molecules to

single-strand DNA and then attaching the DNA to graphene. When an identi-cal single-strand DNA combines with the strand on the graphene, a double-strand DNA is formed that floats off from the graphene, increasing the fluo-rescence level. This method results in a sensor that can detect the same DNA for a particular disease in a sample.

• Ultracapacitors with as much electrical storage capacity as lithium iron batter-ies but, rechargeable in minutes rather than hours. These ultracapacitors store electrons on graphene sheets, taking advantage of the large surface of gra-phene to provide increase the electrical power that can be stored in the capaci-tor.

The University of Manchester – and the Graphene Institute – have obvious vested interests in keeping the Nobel Prize-win-ning discovery as close to them as any new mother with her baby. Yet this has not ruled out already working closely with universities across the North – specifically Liverpool, Lancaster and Durham – with the level of involvement “varying accord-ing to the nature of the research”.

The level of interest amongst companies in the North is also growing, with this mo-mentum likely to move up several gears fostered by graphene events being organ-ised across the region. Behind this push is the Institute’s need for external sectors to help them first prove, then commercialise the potential vast range of applications.

“We are actively encouraging industry in the North and its supply chain to get involved,” says Ivan Buckley. “And we continue to receive interest from a broad range of companies and sectors from the North of England.”

Yet he tempers his obvious enthusiasm with a word of warning: “Despite the pro-gress in graphene science and technology

during the past eight years, the field is still very young and many challenges remain. Some of the challenges are fundamental: due to the unique struc-ture of graphene, many of the possibili-ties it offers are still poorly understood, and their analysis requires sophisticated methods.”

So if any Northern companies see specific applications for their sector, how do they go about getting involved and

what level of support can they expect? “They need to contact me initially,” says Mr Buckley. “And there is support from the region and Government available through funding schemes.”

Interested? All you need to do is email ivan.buckley@manchester.ac.uk. What have you got to lose apart from a poten-tial cutting edge for your business? Let’s get there before the Germans this time, and let them keep the sunbeds.

Graphane crystal. This novel two-dimensional material is obtained from graphene (a monolayer of carbon atoms) by attaching hydrogen atoms (red) to each carbon atoms (blue) in the crystal.

behaviour, debt, poverty and crime. It is time to focus on some of the success sto-ries, be proud of our customers and pro-mote the fantastic range of work we do.

I am passionate about social housing and proud to be the chief executive of one of the UK’s newest and largest hous-ing groups, with 32,000 homes across the North West, Yorkshire and Midlands. The new organisation will provide high-quality community services and the de-livery of over 1,400 much-needed new affordable homes over the next three years. In total, Your Housing Group will have a development programme in ex-cess of £150 million.

Your Housing Group is ready and able to invest in the North. There are tough challenges ahead: with welfare reform, the increasing need for afford-able housing and crucial service cuts for local authorities, the services we deliver are needed more than ever. Working to-gether with local businesses and stake-holders, we can make a real difference transforming lives and transforming communities.

Brian Cronin is chief executive of Your Housing Group, formed in April 2012 following the merger of Harvest Housing Group and Arena Housing Group. He is an accountant by profession but started his career as a housing officer. Over the past 20 years he has worked his way through all the activities that go to make up a modern housing organisation.

Mr Cronin was the founding chair of Fusion21, the multi award-winning employment and procurement group. He was also chair of Procurement for Housing, the national procurement agency for housing organisations jointly sponsored by the Chartered Institute of Housing and the National Housing Federation through Housemark. He also sits on the boards of the Housing Ombudsman Service and the Steve Biko Housing Association.

The gap between haves and have nots will widen

Wednesday June 6 2012 | the times

Business Insight4

Technology

Graphene: could this Nobel prize-winning material transform the economy of Greater Manchester in the way that silicon did in San Jose?

By Mike Cowley............................

The future prosperity of Greater Manchester could well hang on a revolutionary material that has the potential to replace silicon in iPads, making them

not only many times faster but also suf-ficiently thin and flexible to be rolled up and carried under the arms of users. One pundit has even claimed that this could be taken a stage further, where a tablet or a smartphone when not in use could be bent into the shape of a pencil and simply be stuck behind the ear.

Such is the excitement that has sur-rounded graphene since its discovery by two Nobel Prize-winning scientists at Manchester University that not only is it seen as a replacement for silicon, but its potential applications across all sec-tors of industry are so extensive that it is reported to be the frontrunner to receive a €1 billion investment from the cash-strapped European Commission.

Graphene not only has the potential to transform Greater Manchester, but also to drag in Liverpool, Leeds, Newcastle and Sheffield as part of “Graphene Val-ley”, as happened with Silicon Valley in Northern California.

The thinnest and the strongest materi-al known to science – three million sheets of graphene would be just 1mm thick, and it is reputedly 200 times stronger than

structural steel – graphene is also the most conductive. About 1 per cent of gra-phene mixed into plastic would convert it into an electrical conductor.

Samsung has been one of the biggest investors in the research involving gra-phene since its true potential was dis-covered eight years ago, and has already demonstrated a 25-inch flexible touch-screen using the material.

“According to the Nobel Prize Commit-tee,” wrote Richard Van Noorden in Na-ture magazine, “a hypothetical one metre square hammock of perfect graphene could support a four kilogram cat – the hammock would weigh 0.77 milligrams, less than a cat’s whisker, and would be virtually invisible.”

Whereas graphene is obviously a breakthrough of critical importance, the scientists involved feel uncomfortable about the more extravagant hyperbole which seems to place it on a par, in the public’s imagination at least, with Super-man’s kryptonite.

The problem they face is to manage expectations as graphene takes its first steps on the road to full commercialisa-tion. Asked if there was any truth in the story that planes made out of graphene were on the horizon and would be 10 times lighter than existing ones – with all the potential fuel benefits that would bring – a member of the scientific team’s inner circle responded:

“If graphene finds applications in fu-ture aircraft construction, it won’t be just plain graphene, but graphene-reinforced composites. The shell of a plane could be made lighter if current aluminium construction is replaced by graphene composites. Graphene composite would provide some additional advantages, such as making the shell conducting, and providing lightning-strike and radiation-interference protection. Claims such as 10 times lighter are unscientific guesses and should be avoided.”

However, he did go on to say that bendable phones and tablets are not un-scientific guesses. “The possibility of flex-ible electronics is perhaps the most excit-ing graphene application. Graphene can be used to make flexible touchscreens, flexible electronic circuits, flexible casing and even flexible batteries. It is therefore not impossible to imagine a future with bendable phones and tablets, where gra-phene is used to manufacture most com-ponents.”

Considering that this is a measured view from a reliable scientific source, gra-phene remains a headline-grabber. Even the way it was discovered by two Russian scientists working at the University of Manchester – Andre Geim and Konstan-tin Novoselov – provided fodder for every media headline writer. “How sticky tape trick led to Nobel Prize” was how BBC News reported the story.

The hunt for graphene began in 1987, when the term first appeared in a scientif-ic journal, and ended in 2004. During the intervening years, the sought-after prize was to produce single layers of graphite,

but nothing thinner than 50 to 100 layers appeared.

Then came the day Geim and Novo-selov simply placed sticky tape on graph-ite and managed to rip off thin flakes: many layers together at first, but then – repeating the process – the layers became thinner. They were left with very thin flakes attached to the tape, which was then dissolved into solution. Whereas it was generally thought impossible for such thin crystalline materials to be sta-ble, graphene proved them wrong.

Graphene, in scientific speak, is a form of carbon that exists as a sheet, one atom thick. These atoms are arranged into a two-dimensional honeycomb structure. But not everyone has been “sold” on the benefits of graphene. The silicon indus-try, for one, won’t willingly abandon its investment to switch to graphene. The physics of how a silicon transistor works are very different from how a graphene transistor would work, so it will not be just a question of replacing silicon with graphene. A whole new architecture based around graphene transistors has to be developed.

Graphene transistors can do things that silicon cannot, such as offering the possibility of transparent and flexible electronic circuits. So in the short- to medium-term, there will be a need to look to applications where silicon can-not be used, rather than where graphene might replace silicon.

This notwithstanding, the University of Manchester and Greater Manchester itself is aware that it has the hottest of properties on its hands. And learning the lesson from failing to capitalise on the work of Alan Turing and the devel-opment of the “Baby” computer, plans are already well established to safeguard their dual interests and ensure that this is definitely one route back to continuing prosperity.

With the establishment of a graphene hub and the National Graphene Institute in the city – as well as a startup company, Graphene Industries, there is a real intent to ringfence ownership of the technology, at least in part.

Significant investment from compa-nies worldwide is expected for the Na-tional Graphene Institute, with a key financial benefit being that future gra-phene scientists and engineers will be trained there. In turn, this will make it even more attractive for companies to invest in graphene-based manufacturing in the North. In the meantime, the Gra-phene Institute itself will create a num-ber of new scientific and high-tech jobs as well as postgraduate studentships in Manchester.

Keeping a watchful eye on what is happening is a University of Manchester strategy group, led by Professor Dame Nancy Rothwell FRS, the president and vice-chancellor. The membership also includes a senior member of staff from Manchester City Council. Project man-agers have been established for all key areas, with the framework and support in

From pencil lead to the future of smartphones

Graphene can be used to make flexible touchscreens, flexible electronic circuits, flexible casing and even flexible batteries

Professor Dame Nancy Rothwell FRS, president and vice-chancellor of the University of Manchester

Andre Geim and Konstantin Novoselov

place to develop spin-out companies and to attract inward investment.

“The project is attracting some of the very best academic and technical staff to Manchester to complement the existing expertise,” says Professor Rothwell. “I personally discuss progress with the chief executive of the City Council and report any updates to the Local Enterprise Part-nership, of which I am a member.”

She does not see any major obstacles to Greater Manchester eventually be-coming the centre of a booming Gra-phene Valley. “It has great potential,” she says. “We have great advantages – the remarkable properties of graphene were demonstrated here and the two Nobel Prize-winners who made the discoveries are based in Manchester – indeed they continue to make new discoveries and breakthroughs.

“We also have a large cohort of out-standing staff carrying out research and development into the many applications such as electronics, photonics, composite materials, energy, biomedicine. There is also an excellent partnership between the university, the city and the business com-munity.”

But how many companies are likely to be established in Greater Manchester as spin-offs from the graphene hub – and what will be the impact on jobs locally? “This is still a question rather like how long is a piece of string?”, Professor Roth-well says. “There is great interest from across the world and it’s still very early days.

“In the near future, we can estimate jobs in the hundreds – but of course many are very highly skilled positions. Beyond the next few years we would hope for many more primary and secondary jobs to be created.”

Will graphene ever reach the stage where it will rival the importance of cot-ton in the past – when the city was known as “Cottonopolis” – in terms of impor-tance for Greater Manchester’s future? “Yes, certainly,” says Professor Rothwell. “Some say that the potential of graphene is limited only by our imagination, but exactly where this ‘wonder material’ will take us, how and when, is still difficult to predict.”

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From pencil lead to the future of smartphones

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Think where an MBA could take you

Wednesday June 6 2012 | the times

Business Insight6

Manchester Forum

When the great and the good of the city gathered for a Times North Business Insight forum they spoke with one voice By Mike Cowley

With its massive wrought iron single-span arched roof, the former Man-chester Central railway station – like the city it

has served for 130 years – has experienced its fair share of ups and downs. Once the destination of the gentry arriving on the ostentatious Blue Pullman trains, it later came under the Beeching axe and at its lowest point was reduced to a cavernous car park.

Now rescued by the city of which it remains a landmark and turned into an ultra-modern glass- and chrome-fronted events centre, what could be a more ap-propriate venue for Manchester’s great and good to discuss the escape route from the current turbulent economic times?

Just as the former terminus for the Mid-land Railway expresses continues to amaze train buffs, so Manchester itself continues to amaze in its ability to reinvent itself.

So when speaker after speaker sought to support the theme of “Manchester, the growth engine for the North?” at a Times North Business Insight forum sponsored by Marketing Manchester, there were no dis-senters – although there may have been a few clenched teeth in Liverpool, 30 miles down the road.

Chaired by The Times columnist Mag-nus Linklater, whose long and distin-guished career started in Manchester when the venue was still a railway station, the panel was drawn from the ranks of the very people who are shaping Manchester’s future.

Sir Howard Bernstein – whose passion for the city of Manchester is matched only by his support for Manchester City – was joined by Mike Emmerich, chief execu-tive officer (CEO) of New Economy, the Greater Manchester think tank; Mike Blackburn, chairman of the Greater Man-chester Local Enterprise Partnership and regional director for BT North West; and Tim Newns, CEO of MIDAS.

Growth – the current nightmare of the UK Government – and the way it is cur-rently being tackled by Manchester with its recently unveiled “Growth Plan”, was the theme that underpinned the under-standably flag-waving discussion.

Commissioned by the Greater Man-chester Local Enterprise Partnership from seven of the UK’s most respected economists, the plan is seen as a poten-tial model for national regeneration led by the key cities. It calls on the Govern-ment to allow cities the freedom to create their own special needs and growth strat-egies so they can tackle the reality on the ground, rather than that viewed from the London “bubble”.

As such, it urges the Coalition to al-low more local control over targeting overseas markets, specific skills training to provide the jobs that will underpin growth and to drop the one-size-fits-all centralised approach.

Underpinning all this is a key recom-mendation: that the Government gives Manchester greater discretion over the total tax revenues, created by additional investment in the city, generated in the form of an “earnback model”.

This cry for freedom of action has al-ready won a hesitant degree of acceptance from the Government. Now Manchester wants to maintain the momentum – and the Times North Business Insight forum was selected as the platform of choice to ensure the message came over loud and clear.

Sir Howard Bernstein – never one to miss an opportunity to advance Man-chester’s cause – led the charge and set the scene. “It is becoming increasingly clear that if this country is to achieve growth,” he told the capacity audience, “it is to be down to places like Manchester. What we’ve been doing for some time – and with some success – is to create special need around growth and growth strategies.

“We need a tool kit that enables us to make interventions that accurately reflects the needs and circumstances of businesses in Greater Manchester. We need to have skills to make sure that peo-ple can do the jobs that we are creating.

“We need the ability – to actually grow into a business centre in international markets – that needs a level of sophistica-tion. And the decision we took to set up a combined authority is the distinguishing feature between Greater Manchester and the rest of the country.”

Sir Howard’s views were echoed by Mike Emmerich, a former senior policy adviser in the Prime Minister’s policy unit. Mr Emmerich laid out the qualifi-cations that Manchester already has in claiming to be the growth engine of the North, and what it intends to build on:

With 2.6 million residents, Manchester currently generates 50 per cent of the North West’s economic output and 5 per cent of total national output.

£1 in every £20 that changes hands in the UK does so in Manchester.

Manchester’s economy is bigger than those of Scotland, Wales and several Euro-pean Union member states.

Some areas outside the city are as pros-perous as any in London and the South East. Greater Manchester – even in the cur-rent difficult times – is projecting compound growth of around 2 per cent for the next decade.

With the two most popular universities in the UK in terms of applications – and a cultural scene to rival London – Manches-ter sees itself as having an appeal to young people unsurpassed in the UK, hence a skills pool on which to draw which is second to none.

“So this is not – as some people in the South East like to believe – another city at the heart of a failed experiment in the Northern conurbation,” insisted Mr Em-merich. “What it is, is actually a fundamen-tal driver of the UK’s growth. It is the cred-ible capital of capital growth for the North of England.”

So on what does he base this claim? It goes back several years to when Manches-ter launched its regeneration strategy and when “a very large slice of public money” was given to an independent panel made up of some of the UK’s leading economists.

Headed by Jim O’Neill of Goldman Sachs, the panel was asked to analyse the strengths and challenges of the city. “They came back with the answer that if there’s one place out-side of London and the South East where we should be investing for growth in the UK, it’s Manchester,” said Mr Emmerich.

When asked by Magnus Linklater where this growth is to come from, the New Econ-omy CEO admitted that he did not expect “a large-scale increase in jobs in manufac-turing” but predicted there would be con-tinued growth in financial services and retail distribution in a services sector which would remain buoyant.

The course Manchester leaders needed to follow, he said, was to “think out of the box” if they are to emulate the success of their predecessors two centuries ago which saw them undertake groundbreaking schemes such as building the canal to bring ships from the sea.

Mr Emmerich said they were currently re-examining Manchester’s economy to see what is capable of being first-class now – rather than waiting for something to arrive. Graphene, the Nobel Prize-winning material discovered at the University of Manchester, is viewed as the major success of this ap-proach.

Lighter and more flexible than silicon, gra-phene is now seen as a natural replacement for its well-established cousin in the manu-facture of computers and smartphones. It also has the potential to enable planes to be built at one-tenth of their current weight – with all the advantages this will bring in fuel savings.

It is the credible capital of capital growth for the North of England

The establishment a National Graphene Hub in the city has already brought in £50 million of inward investment to under-write what some see as only the first stage of transforming Greater Manchester into the next Silicon Valley.

Mr Emmerich cited the city’s approach to backing graphene as an example of how Greater Manchester has set out to chal-lenge orthodoxy – a situation he believes needs to be emulated in terms of the city’s approach to growth both at home and abroad. “While we obsess about the future of Greece in Europe, China is creating a new Greece every three months or so. We need to grab a slice of that action,” he said.

It was left to Tim Newns to emphasise the urgency for Manchester to build on a platform which has seen the city achieve an increase from 3 per cent to 5 per cent in terms of inward investment over the last five years.

Whereas historically most of Manches-ter’s overseas trade and investment oppor-tunities have come from Europe and the United States, Mr Newns called for the city to look further afield. And not just to the BRICs (Brazil, Russia, India and China), but also to Turkey, Indonesia, Mexico and South Korea, which are now mounting their own challenges. To achieve this, the MIDAS team has been studying global cities that have been “doing particularly well” – those in high growth markets such as India and China.

“There has been a huge transition from West to East in terms of globally impor-tant cities,” Mr Newns said. “Two hundred of these are now Chinese cities. We need to continue to invest in skills, in industry, so that we can compete against cities like the Chinese one which has just laid 22,000 miles of train track.

“Over the last 10 years global growth has been 3 per cent, over the next 10 years it has been forecast at 4 per cent. We need to be in a position to break into these growth markets. The challenge is to have the skills to break out of the Eurozone in terms of economic stability. We need to make sure we are at the cutting edge of the skills market.”

Skills – or the critical need for them to support the growth strategy – was the theme taken up by Mike Blackburn. “We’ve got to get our skills right,” he said.

Forum attendees wanted more local control

Manchester’s cry for freedom to grow anew

Business Insightthe times | Wednesday June 6 2012 7

7

Speaking recently at Manchester Busi-ness School Allan Leighton, the former CEO of Asda and one of the UK’s most respected business figures and manage-ment thinkers, said it was wrong to talk of being in the “aftermath” of the economic crisis. “We’re still in it and it’s going to be with us for another two or three years. Most people I talk to say it is the toughest they’ve ever known.”

In this unprecedented economic landscape business schools play a key role in giving business leaders the skills to seize opportunity and succeed. In order to do this MBA programmes are becom-ing increasingly agile in adapting to meet these requirements.

Manchester Business School has also identified that a downturn of mature markets, a growth of emerg-ing markets and a surge in digital technology has sig-nificantly changed the way industries are looking to do business. As such it is evident that exploration into new markets and cultures, and the

need for global business communication, will play a vital role in the future of the MBA.

Professor Michael Luger, Dean of MBS, said: “Our MBAs will always have their core course modules in business leadership, management and econom-ics. However, we have responded to the changing global business environment and the rapidly changing way in which we communicate to offer students the flexibility of choosing additional courses that will equip them with the skills and understanding they need to do business worldwide.”

As the only business school in the North West to offer a Part-time Global MBA, MBS has responded quickly to industry demands for new globally savvy leaders through a range of new courses aimed to enhance overall communication skills but specifically in new growth areas and emerging markets.

Michael Luger continued: “Globalisa-tion and the global economic crisis have forced business leaders to rethink the way they do business. There is a real under-standing now that to succeed in this new environment a business needs people who have practical experience, wide business and cultural understanding and ability to work on a global scale.

“Our MBA is able to provide the next generation of leaders with global leader-ship skills, global contacts and the experi-ence of working across different business cultures.”

MBS has a number of international companies on its Part-time Global MBA programme such as AstraZeneca, BAE Systems, Bank of New York Mellon and HSBC, that study at its six international centres in the US, Dubai, Shanghai, Singapore, Hong Kong and Brazil.

What’s next for the MBA?

Business Insightthe times | Tuesday September 27 2011 9

james glossop for the times

it’s such a great business that when the op-portunity arose to become chief executive, well, you just don’t turn down that down.

“There is a great team of senior man-agers and talented people across the organisation, so the opportunities to do something quite special here are very exciting. That’s what gets me: I want to realise the potential of this business. The group has come a long way in the past decade — now we’re focusing on the next stage and being passionate about what is

Innovation driven by customer demandsNorth America’s growing demand for “fracking” equip-ment used in extracting oil and gas from shale is key to Weir Group’s upbeat profit predictions announced during the summer.This half-term report detailed income up 33 per cent to £1.03 billion, orders soaring by 43 per cent to £1.2 billion and pre-tax profits boosted by 23 per cent to £178 million.At the time Keith Cochrane commented “The group will continue to invest to grow ahead of our end markets and we now expect profits for the full year to be somewhat ahead of our previous expectations.”Founded in 1871 in Glasgow as G & J Weir, the company was responsible for the invention and

manufacture of pumping equipment for the Clyde shipyards.Today, Weir Group employs around 13,000 people in more than 70 countries, working in the minerals, oil and gas, and power industries. Rapid growth continues to be been driven by expanding into emerging markets and providing services globally.Innovation driven by customer demands is central to the company’s success, and earlier this year it announced the investment of £2 million in a dedicated research facility. The Weir Advanced Research Centre

will be a central plank of Strathclyde University’s recently established Technology and Innovation Centre in Glasgow. Cochrane said the partner-ship would “continue to bring breakthrough developments to our

almost a new set of challenges.“It’s back to that passion about doing

things better, opening our minds — and our organisation’s mind. We operate in huge markets but as a player we’re rela-tively small.

“Through strategic planning we’ve identified opportunities to broaden our market and product portfolio, and our geographic footprint, partly through organic growth and partly through ac-quisition. It’s that real sense of opportu-

Keith Cochrane believes in investing in talent that will help Weir Group to build a sustainable, long-term business

nity that excites me, to see how far we’ve come, and to see how far we can go over the next ten years.

So, is he worried that global economic slowdown might blow those plans off course? “Every company has to be sensi-tive to the economic environment around it and be sure it is on top of any potential implications. Having said that, I would step back and look at our experience as we went through 2008 and 2009, where there was a significant drop-off in activ-ity impacting on markets. We were very clear in terms of the action we took: we reset the base, looked forward.

“Lots of opportunities come out of these difficult times but it doesn’t take away from the medium- to long-term fun-damentals across our markets. Mining, oil and gas resources are finite and there is a growing demand for them. That combina-tion is going to drive further investment.

He believes in taking a positive view: you can’t ignore the short-term environ-ment, but you can look at it in the context of a few years ago and the broader oppor-tunities in the longer term, he says.

Looking forward, Cochrane stress-es, also means investing in talent, and he is almost evangelical about encouraging individual potential. “It’s our people at whatever level

they contribute who make the difference, who enable us to deliver,” he says. “Look at our growth in the past couple of years, both in achieving that and moving ahead needs capability in our people.

“We are investing significant sums in this, and have just kicked off a senior management training programme. If we don’t have the people we will be held back. While investment and continued focus are very much at the forefront of my priorities, in my leadership role as CEO it is also vital to make sure we are building up the next generation of managers.

“It is back to building a sustainable long-term business. If we only wanted success for a year or two, we wouldn’t be doing a lot of things we are very focused on now.”

Despite that unrelenting focus, Cochrane agrees, having a good life bal-ance is crucial. “When I’m working I’m passionate about the business, I do thrive on it; I’m quite driven. However, I have a relatively young family, and at weekends I tend to focus on the kids — although my wife would say not always exclusively!

“I try hard to have a different sense of perspective. When you have a senior management role it can easily take over, so the ability to step back and have a dose of reality, like taking your daughter to a sports class on a Saturday, is good for everyone.”

Perhaps the most surprising discovery about Cochrane is despite his business DNA, he’s not all about the numbers. Ultimately, of course, he wants them to add up, and then to multiply. Yet there is a strong sense he is aware of his respon-sibility as part of something bigger, and wants to play his part. Cochrane, it seems, is an architect.

“With Weir, it’s that rich heritage, the tremendous track record: I want to build upon that,” he says. “This is, quite rightly, a very proud business, so I want to do my small bit to help move it forward, help sustain it for the next 100 years. You don’t do that by standing still.

“It requires initiative and ability to seek out opportunities and take advantage of those opportunities — that is the broader message that sits comfortably with what the underlying themes are for our busi-ness today, and it’s driving our teams across the world.”

Challenge of turning big ideas into reality is key

For many years, Scotland’s life science sector has been heralded as one of the nation’s rising stars.

We have a tremendous oppor-tunity to leverage our resources including the NHS, our universities and our excep-tional heritage for medical innovation, talent and infrastructure to encourage and attract big business. So why does is it that many of our young life science companies are struggling to get off the ground?

The challenge of turning ideas into reality and companies of scale still seems to elude all, but a few, and is an issue that needs to be urgently addressed.

The life science industry is truly global and Scotland, as others, has identified it

as a key sector to drive future wealth and prosperity. But aspiration isn’t enough and we need to act now to fully exploit the opportunity before we get left behind.

Lack of funding is a vociferous lament by those in the sector.

Scotland has a vibrant business angel community and the Scottish Investment Bank’s Co-investment and Venture Funds play an important role. However, there is a growing sense of foreboding that this money could be redirected at renewables. Coupled with our lack of a strong active Venture Capital community, specialis-ing in life sciences in Scotland, growth is inevitably slow.

That said, life science is fundamen-tally a long term, high-risk business. It is expensive, for instance, to take drugs through clinical trials and into the market with no guarantee of a return. But if Scot-land is serious about its life science sector, we need to find ways to get businesses to a point where venture capital money is forthcoming.

While Scotland’s life science sector remains made up of many diverse small companies, there may also be an argu-ment for consolidation. Pooling resources and collaboration to create critical mass with other indigenous companies or part-nering with organisations overseas is one route and may well prevent some compa-nies from failure in these particularly hard times. Getting investor ready is another prerequisite, especially with major foreign organisations looking on.

Scotland has an exceptional pool of talent and ideas. But in today’s global competitive economy that is not enough without the right incentives and the busi-ness infrastructure to support them.Neil McInnes, Head of Technology, Grant Thornton Scotland

PROFESSIONAL BRIEF

in association with

Neil McInnes looks to pooling resources

Prof Michael Luger, Dean of MBS

“If we don’t get that right, we won’t have a workforce to fill that growth prospect. Only then can we can start attracting businesses and organisations here.”

Greater Manchester has already made a start to ensure it retains the skill base to feed the growing financial services sec-tor – it currently offers both a financial services apprenticeship and a part-time financial services degree.

Mr Blackburn told the forum that Greater Manchester must focus on offer-ing skills across the board: from the highly skilled to simply making sure that every single Mancunian has the qualifications – no matter how limited – to get a job.

“Business is concerned about having second or third generation unemployed because it creates a bad sense of place,” he said. “We need to inspire young people that there is an opportunity to get a job. It may not be as an astronaut, it may be driving the buses, the trams, working in hotels – but there are jobs out there that their fathers, their mothers, their grand-parents never had. We need to look at where we will have 5,000 jobs in a few years and work towards filling those re-quirements.”

As the regional director for BT in the North West, Mr Blackburn feels that the strength of Greater Manchester can be found in its history of collaboration be-tween the private, public and voluntary

sectors. “People actually come together and execute plans here like no other place can do,” he said. “We have to sell Manchester because we live here, we work here – it is about us collaborating – and it works pretty well.”

Mr Blackburn ended with a warning note on what might throw the Greater Manchester growth plan off course. “We’ve got a plan,” he said, “we under-stand what the plan says, we believe it is going to work – at the same time as being flexible.

“We have put that offer to London. Give us more control, give us more de-regulation of power, more opportunity. People have started to listen to us and release that stranglehold, so we have to capitalise on that. But we should guard against change – change in the sense of the Government changing policies over-night.”

Winding up the forum, the chairman referred to Manchester’s “tremendous Victorian past” as reflected in the Man-chester Central venue – and how this suc-cess could well be replicated through the new proposals for regeneration.

Perhaps then – if the Greater Manches-ter growth plan lives up to its top billing as a model for all cities – Benjamin Dis-raeli was not too far off the mark when he wrote that “What Manchester does today, the rest of the world does tomorrow.”

Sir Howard Bernstein can always be found in Greater Manchester’s corner, ready and willing to come out swinging verbal blows for the city to which he has dedicated his working life since he joined the city council as a junior clerk.

It was not surprising, then, that he didn’t pull any political punches when he took issue with the Government during the forum. First it was UK Trade & Investment (UKTI), the body the coordinates overseas trade initiatives, that was the subject of his ire.

“We have a system at the moment that all our economic interests are coordinated by UKTI,” Sir Howard said. “I’m not completely convinced that the UKTI, as a London-centric organisation, is capable or able to differentiate between the key assets – key opportunities for different parts of the UK. How we manage that debate is going to become increasingly important.”

Sir Howard was then equally scathing on the subject of skills training. “We don’t want training providers providing what is easy to provide and potentially useless,” he said, “which may be OK to them but not helpful to [the] Greater Manchester economy.

“We need fewer hairdress-ers and a lot more people in

knowledge-based activities. Skilled apprenticeships is the single most important driver to Manchester economy. We need to have ability to control more of these programmes – without that ability, we will continue to struggle, not only Manchester but in the UK.”

Sir Howard finally did have a good word for the Govern-ment. “Cities are increasingly important and, if we are to come through, the country will have to look to places like Manchester,” he said. “I think over the last decade we have demonstrated what good local government can be able to influence and change.

“We have understood the wider reform agenda, we have helped create the framework for the reform debate, we have built up the necessary infrastructure in terms of the airport and local transport – and we have HS2 [the high speed rail network] on the way.

“Now we need to ensure that impetus for reform which we have driven locally is capable of being embraced at national level. The progress we have made over several months is real testimony to way this Government has been prepared to carry on a process of engagement. It reflects a realisation that not one size fits all.”

Manchester should focus its resources on encouraging more trade and investment with growth markets such as China.

Funding should be secured to expand the activities of the city’s business growth hub.

The Government should reinstate Harwell and Dares-bury as the UK’s twp national science campuses.

The size and reach of export guarantees needs to be extended.

Manchester should implement a unified planning regime to make better use of funding mechanisms such as the community infrastructure levy.

The Government should review how green belt and greenfield land is treated in densely populated areas such as Manchester, where economic growth is a priority and existing patterns of land

use differ greatly from the South East.

Skills funding must become far more responsive to the needs of business, and local business should have more say on how this public money is spent.

The Government should give Manchester greater discretion over the total tax revenues that growth created by additional investment in the city generates.

The Government should work with Manchester to look at how the design of the public works loan board might be holding back the development of the local authority bond market in the UK.

The Government should seek to enable local economic growth through its business rate retention proposals. Manchester should also offer a beacon business rate discount for some key business sectors.

Tim Newns, Sir Howard Bernstein, Magnus Linklater, Mike Emmerich,Mike Blackburn

Sir Howard comes out fighting for city

Recommendations of Manchester’s plan

Wednesday June 6 2012 | the times

Business Insight8

Cover story: Jim O’Neill

Jim O’Neill – the Mancunian who not only chairs Goldman Sachs Asset Management but is also rumoured to be in the frame to become the next Governor of the

Bank of England – clearly recalls the morning his late father read him the riot act.

Having come downstairs bleary eyed before heading off to the tough Cross-acres junior school in Wythenshawe, the football-obsessed youngster asked his postman father Terence: “How did United go on last night?”

The response was brusque. “Forget about bloody United, get your breakfast, get to school and get an education.”

Jim O’Neill did get his breakfast, did get to school and eventually got a good education – but he never forgot about Manchester United. Even as he climbed the career ladder to his present heady position at Goldman Sachs, the football club remained his overriding passion.

Today, almost half a century later, the fact that deadly rivals Manchester City snatched the league title away from his team with what was effectively the very last kick of the season has left him feel-ing “mortified”.

Now, thanks to the growing influence of football internationally, Manchester United – and to a lesser extent Man-chester City – is once again high on Mr O’Neill’s professional agenda as he helps shape the Manchester Growth Plan to drive the resurgence of his much-loved home city. For Manchester United is

now likely to be joined by the blue moon rising boys in an international brand that Mr O’Neill knows can open the doors to key growth markets such as China.

“Everywhere you go in the world,” he says, “people always ask you where you come from. When I say Manchester, the instant response is ‘Manchester United’ and increasingly that will also bring City into the frame. And I believe the new leader in China is a football fan, so what better way to introduce your city than through a shared interest in football?

If life had turned out differently, Mr O’Neill might well have ended up play-ing for Manchester United, as he turned out for Manchester Boys on what was then the forerunner of the “Theatre of Dreams” pitch. He showed little sign early on of the skills that have since won him international acclaim, his only re-corded attributes early in his school life being “football, football, football”.

Born in Gatley – described incongru-ously by one journalist in an interview as “the wrong side of the tracks” but remembered by Jim O’Neill as “Stately Gat(e)ly” – he shared a modest home with three sisters. The fact that the fam-ily house was on the wrong side of Styal Road – one side was Cheshire, the other Manchester – meant that the option was to pay for a private school or go to Crossacres in Wythenshawe, the largest council estate in Europe. Payment was a non-starter, so his formative years, as were those of his sisters, were honed in a tough environment.

With primary and secondary school behind him, he was then channelled to Burnage Comprehensive. Not very good timing, as this was first year of its transition from the grammar school status. Fortunately for Mr O’Neill, his father Terence – who definitely came from the wrong side of the tracks himself – was obsessed with his children getting an education. His mother, Kathleen, also raised in Gatley, shared this passion for their children’s education.

That resulted in two of his sis-ters going on to Withington Girls’ School and then to university and successful careers, while a third sis-

ter went to teacher training college and a worthwhile life in education. Jim O’Neill was never a dullard at school

either, but football just tended to get in the way. He showed prom-

ise at primary, but by junior school the only thing he want-ed to do was play football and the thought of going on to university was never on his horizon.

In some ways, his father was responsi-ble for his all-encompassing love of the game. “I went to my first ever game with him,” Mr O’Neill recalls “That was Chari-ty Shield against Liverpool in 1965. It was two-all and I can remember it as though it was yesterday, with Willie Stevenson scoring a header from outside the box.” However, he admits his father was more of a Manchester United “sympathiser than a fan”.

Inherently bright, his father Terence had been forced to leave school himself at 14, a fact which fuelled his obsession with his children obtaining an educa-tion, seeing it as the only route out of the working-class environment into which they had been born.

Slowly but surely Jim O’Neill almost unwittingly began to bend to the paren-tal pressure, picking up seven average O levels, then surprising everyone – includ-ing himself – by coming joint-top at A level. “People were really shocked that my grades were so good,” he remembers, “and I was shocked as well. I got two As and a B. That was in the days when As meant something.”

Then it was off to Sheffield University and a degree in economics. It was only then that his oldest sister began to take notice of him. “She was the real boffin of the family and wouldn’t actually speak to me until I made it to university. Up to then she had thought I was a complete waste of space, a useless good-for-noth-ing so and so.”

The family was even more surprised when Jim went on to get a PhD from the University of Surrey. And no one was more delighted than Terence O’Neill. “When I went on to do my PhD, the only person in the world who saw it wasn’t a ridiculous thing for me to do was my father,” says O’Neill says. “After I’d got it and went to live in the States, he sent me the Football Pink [newspaper] every week and used to address it to Dr Jim O’Neill.”

Even with an economics degree and PhD under his belt, Jim O’Neill still didn’t seem to have the right creden-tials to make it in the City, let alone at Goldman Sachs. No wing-collared, tail-coated Eton boy here, no Bulling-don Club contacts to fall back on. “Mr O’Neill does not fit into the stereotype of a top City executive from an elite background,” was how the BBC de-scribed him.

Yet the survival skills learnt as a lad at Crossacres school stood Mr O’Neill in good stead in what he described as “a tough environment”, and he eventu-ally amazed his family at least by be-coming chief economist at Goldman Sachs. With a particular interest and success in foreign exchange, he was de-scribed in 2005 by former BBC chair-man Gavyn Davies as “the top foreign-exchange economist anywhere in the world in the past decade”.

He made his name by accurately fore-casting such economic milestones as the rise of the yen in the mid-1990s, and the rise of the euro in 2004 and 2005. International Finance described him as an “Economics Rock Star”, who could fill the vast River Court auditorium at Goldman Sachs International’s London headquarters with the City’s elite.

What really brought Mr O’Neill to wider public attention was when he coined the term BRICs (Brazil, Russia, India and China) in a 2001 economic thesis entitled The World Needs Better Economic BRICs. Now he has decided that the term “emerging markets” can no longer be applied to the BRICs or to countries such as Indonesia, South Korea, Mexico and Turkey.

“These are now countries with large-ly sound government debt and deficit positions, robust trading networks and huge numbers of people all moving steadily up the economic ladder,” Mr O’Neill says in his recently published book The Growth Map.

BRICs and mortar and football’s reachJim O’Neill, the chair of Goldman Sachs Asset Management, is a proud Mancunian who sees the global reach of his city – and its football teams – as key to its future says Mike Cowley

Old Trafford, home of O’Neill’s overriding passion

Forget about United, get your breakfast, get to school and get an education

PICTURE: vIsITBRITaIn/PawEl lIBERa

Business Insightthe times | Wednesday June 6 2012 9

Helping hand for disadvantaged kids

Factfile �� Born March 17 1957, Manchester

Education�� Crossacres Primary and Junior, Wythenshawe�� Burnage Comprehensive (7 O levels, 3 A levels)�� Sheffield University (economics degree)�� University of Surrey (PhD)

Career�� Bank of America�� International Treasury Management, a division of Marine Midland Bank�� Swiss Bank Corporation – head of global research�� Goldman Sachs, partner, co-head of global economics re-search and chief currency economist�� Goldman Sachs, head of global economics, commodities and strategy research�� Current chairman of Goldman Sachs Asset Management, help-ing guide all aspects of GSAM’s business around the world

Memberships�� Board of Itinera Institute�� Board of Bruegel�� UK-India Round Table and the UK India Business Council

Interests �� Manchester United

BRICs and mortar and football’s reach

Jim O’Neill: “The fact that I came from Manchester also had some appeal”

“For investors to understand the scale of the opportunity here, and for poli-cymakers to grasp what is changing in the world, they must see these countries apart from the traditional ‘emerging markets’. I decided that a more accurate term would be growth markets.”

It was Mr O’Neill’s high profile as an economist – and his well-known links to the city through Manchester United – that saw him approached to become chairman of the Greater Manchester Local Enterprise Partnership Advisory Board. This in turn has seen him head-ing the expert panel behind the Man-chester Growth Plan.

“It came about because of three things,” he says. “My notoriety – peo-ple’s awareness of what I’ve done – for 15 years as chief economist of Gold-man Sachs. Very well known, it carries a lot of prestige. The fact that I came from Manchester also had some appeal. Then through football obviously I know Howard [Sir Howard Bernstein, CEO of Greater Manchester Council] quite well.”

With Sir Howard being a keen Man-chester City follower, here then is a case of two rival fans suspending their hos-tilities for the common good of the city. Mr O’Neill readily accepted the offer to work with Sir Howard to help Man-chester by chairing the panel behind the growth plan.

“It’s because of my legacy as a Man-cunian,” he says. “I’m very proud to be from here and I’ve not forgotten it. What

little I can try to do to help in any way, I’m very happy to do.”

As Mr BRIC, Jim O’Neill remains convinced that the regeneration of Manchester will be best shaped by forging further links with the growth economies, the importance of which he illustrated with the news that 20 per cent of Apple’s record profits have come in the form of sales to China. He sees exploiting cutting-edge technology such as graphene in these markets as the key to the city’s future prosperity, following the lead of Hamburg which has achieved success without “kowtowing to central government”.

And Mr O’Neill believes the best way to achieve this can be found very close to home – and to his heart – with the Man-chester United brand of today backed by the growing strength of the rival Manchester City brand. “Because I am Mr BRIC and travel all over the world,” he says, “in my judgement Manchester United is one of the biggest BRIC con-tent players in the world.

“That’s why the current owners obvi-ously value it so much. Every where I go and I say I’m from Manchester – unless it is in Japan where they can’t speak good English – they say ‘Manchester United’. It is always ‘Manchester United.’”

Yet he believes that up the road in Liv-erpool – where “it has been a bigger chal-lenge for them to move with the times” – they have stolen “a bit of a march with their involvement with China.”

Mr O’Neill described Liverpool as “very smart” to send a delegation to the Shang-hai Exhibition, with the result being that the Chinese are reported to be keen to invest in the Peel Holdings projects in Liv-erpool and Wirral Waters. “Interestingly enough,” he says, “the only other team that was close in terms of overseas interest is Liverpool. They are huge in South East Asia. But Manchester United are a truly global force.”

He cites the example of United’s global reach in what he saw when he took his wife on a surprise trip to Everest base camp for their 25th wedding anniversary. “We had to walk to base camp and it is quite a tough thing to do,” he says. “After the first couple of days, to keep my sanity with altitude is-sues, I started to count what different foot-ball shirts the Sherpas were wearing. And even out there Manchester United was easily the most popular.”

Jim O’Neill’s obvious obsession with United was taken to the limits when he reputedly led the Red Knights, a group of wealthy supporters, who unsuccess-fully attempted to wrest control of the club from the Glazer family. Yet it is an obsession to which he readily admits. As Bill Shankly of Liverpool once claimed, it seems to be more serious than a matter of life and death.

With a glittering career not only behind but also still in front of him, Jim O’Neill believes that if there is one person he has to thank, it is his father. “I owe him,” he says simply.

The one thing Jim O’Neill has never forgotten about his school days in Man-chester was that a lot of his schoolmates were brighter than him. I went to school with some very tough kids who wouldn’t have had the same kind of influence that I had,” he says. “So I often think of kids who were really bright but they just didn’t have the support or encouragement for educa-tion that I had.”

When he became “reason-ably wealthy” as a partner of Goldman Sachs after it went public, he decided he would try to do something about it. His payback route was through education charities – in particular Support and Help In Education (SHINE)

– which helps fund out-of-school projects for some of the most disadvantaged children, mainly in primary schools.

And for some time, Mr O’Neill also funded his own personal scheme which provided money for the sec-ondary schools that showed the best improvements in terms of results. “I was lucky I had a mother and father who realised the importance of ensuring [their] children got a good education,” he says. “Not everyone is that fortunate.”

In 2009, Mr O’Neill received an honorary doc-torate from the Institute of Education at the University of London, for his educa-tional philanthropy.

PICTURE: RIChaRd PohlE

Wednesday June 6 2012 | the times

Business Insight10

Biotechnology

A North West biotechnology business is targeting flotation after completing the takeover of a US-based company in a £3.7 million deal. Arcis Biotech-

nology, based in the Enterprise Zone at Daresbury Science and Innovation Cam-pus, has acquired California-based Altos Medical. The deal includes the raising of a £1.2m war chest for further accelerat-ing the research and development (R&D) product pipeline, which will allow Arcis to commercialise a number of promising new products. It brings the value of the new Arcis group of companies to £7.7m only 18 months after its first-round fund-raise.

“This kind of deal sends a very clear message that UK North West plc is alive, thriving and competing on a global stage,” said Professor John Womersley, director at Daresbury and chief executive of the Science and Technology Facilities Coun-cil. “Daresbury is a location where inno-vation, science and enterprise meet. We are delighted to see one of the Enterprise Zone’s first tenants experiencing such positive growth and delighted that our world-class laboratory facilities have been of such assistance.”

Arcis, headed by Peter Whitehurst, a former director at Scholl footwear and Durex condom giant SSL International, produces environmentally friendly clean-ing and germ-killing products for diverse markets and applications. The company is in discussions with several global com-panies keen to utilise its proprietary tech-nology. Arcis also includes in its product range an application for turf care which is already used by Premiership football clubs and international stadia.

Altos owns a complementary anti-microbial technology which enables the ultra-fast killing of particularly difficult pathogens such as Clostridium difficile, tu-berculosis and Norovirus through cleans-ing and disinfection applications. It has widespread potential in hospitals, dental surgeries and other public health facilities across the world and is already used in a number of countries.

Altos is profitable and has a global distribution agreement with a major US medical distributor for the sale of its prod-ucts into the medical and dental markets worldwide.

“This deal brings together two strate-gically complementary businesses,” Mr Whitehurst said, “one with proven cash-generative assets and the other with signif-icant and proven proprietary technologies which will deliver major revenue streams in coming years.

“The acquisition will therefore create a combined group that will be both profitable and cash generative, enabling the faster de-velopment and commercialisation of other Arcis and Altos products to access signifi-cant untapped markets. As an example, the ability to safely kill the difficult Norovirus winter vomiting bug in under one minute – an application which is already interesting a number of cruise ship companies.

“We have hand-picked a very experi-enced management team to deliver the potential of the business, including Dr Jan Rogers who worked with me at SSL Inter-national were she headed up the global in-novation team for Durex.”

Mr Whitehurst said the company is in negotiations with major companies and would, in the longer term, look to float. “Because it is a unique invention, we are talking to a number of consumer compa-nies and these conversations are going pretty well,” he said. “It will be very excit-ing if we can get it into these brands. These are companies with around £800m turno-ver worldwide but our product is not in any [of them] yet.

“In 12 months’ time, I would like to have the teams cemented in and to have achieved revenues and profit targets – we are predicting profits to be in excess of £1m which is very good for a small R&D com-pany. I can see a potential initial public of-fering to float at some point when the prof-itability and value of the company reaches the right level – that’s certainly part of the plan.”

Arcis is also a tenant of the Innova-tions Technology Access Centre (ITAC) laboratory based at the campus and run by the Science and Technology Facilities Council. The company uses the ITAC fa-cilities for research and development ac-tivity. “Our ITAC laboratory is designed to enable businesses to access best-of-class research facilities on a flexible and cost-effective basis,” Professor Womers-ley said, “and it is extremely encouraging to see the development of such exciting and commercially viable technologies as a result.”

Tom Rowley, director at Zeus Capital which provided corporate finance advice on the transaction, said: “This is a trans-formational deal for Arcis. The enlarged group has an exciting range of products and, as a profitable and cash-generative business, will stand out from many of its peers in the sector.”

Karen Procter and Alex Lilley of the Manchester office of national law firm Shoosmiths advised Arcis on the deal. “It was a great opportunity to work on a complex cross-border transaction with the Arcis team which enhances its prod-uct portfolio significantly,” Karen Procter said.

£3.7 million deal spurs flotation for biotech firm

Peter Whitehurst: “I can see a potential initial public offering to float at some point – that’s certainly part of the plan”

After taking over Altos Medical, Arcis Biotechnology from Daresbury is considering an initial public offering when the time is right, writes Lucy Richards

We have hand-picked a very experienced management team to deliver thepotential of the business

When energy provider Eurosite Power recently secured a landmark 30-year deal with the Ability Group to supply energy to five of its Hilton Worldwide-managed hotels, including the Waldorf Astoria in London, it was indicative of how businesses are turning to technol-ogy to reduce overheads.

Eurosite Power only entered the UK market 12 months ago and has already secured contracts totalling almost £17 million. The firm says its success is because organisations are actively seeking cost savings through energy technologies.

It specialises in onsite utility solu-tions, using combined heat and power systems to offer clean electricity, heat, hot water and cooling solutions to hospitality, healthcare, housing and leisure sectors. Businesses only pay for the energy used and are guaranteed a lower price.

“Rising energy costs and the introduction of environmental legisla-tion has put increasing pressure on energy-hungry organisations which are vulnerable to any rise in fuel costs that will affect already narrow margins,” said managing director Paul Hamblyn. “When we entered the UK market we were very confident of the huge demand for effective technologies and innovative commercial models that can deliver instant cost savings. The UK market is definitely more savvy about the paybacks that renewables and clean energy can offer.”

Another business benefiting from the drive to reduce overheads is business communications provider Elite Telecom, which says it has seen a threefold surge in enquiries from SMEs (small and medium enterprises) and owner-managed businesses seeking cost savings in the last year.

“Businesses are increasingly aware that new technologies can not only save money but add value to their bottom line through efficiency improvements,” said chief executive officer Matt Newing. “Every customer enquiry is precious and solutions such as network interactive voice response give businesses the flexibility to smoothly deal with a variation of enquiries.

“Queuing on the phone can also be a costly affair for businesses – which, having persuaded somebody to call as a result of expensive marketing activity, then risk losing an order or a sale through poor call handling. A call-queuing package, such as our own intelligent queuing product [Elite IQ] means organisations can handle large spikes in demand and avoid customer frustration.”

Mr Hamblyn, meanwhile, said that there is an appetite for companies to adopt innovative approaches to cost-reduction – and technology businesses are often ideally placed to capitalise on this demand.

“We have tailored our offer to meet the needs of businesses in the sectors we work in,” he said. “The technology’s installation and operation is hassle-free, doesn’t require up-front capital and delivers instant savings. Indeed, in the last week alone, we received 15 new enquiries about our solutions. The appetite is certainly there.”

Turning to tech to reduce costs

Business Insightthe times | Wednesday June 6 2012 11

The tough economic climate does not mean there are no opportunities out there. Franchising provides a different way to start a businessBy Lucy Richards........................

The UK franchising industry is proving surprisingly resistant to the downturn, new figures have revealed. According to business information provider Key Note,

more than 200 new franchised outlets opened across the UK last year, repre-senting annual industry growth of 3.2 per cent. Although growth is down on the 5.1 per cent recorded in 2010, the figures indicate that franchising has avoided the setbacks suffered by other markets.

The PC Support Group, a provider of outsourced information technology (IT), is typical of the operators which have managed to prosper over the period. The company was launched in Liverpool in 2007 and has since developed 10 fran-chise locations in England and Scotland.

“The business driver of our business is simply the relentless growth of IT in peo-ple’s lives,” says managing director Phil Bird. “IT is everywhere and the technol-ogy changes all the time – the arrival of

services like cloud computing, for exam-ple. Our customers are the owner-man-agers who want all the benefits of having high-quality IT support to hand, without having to have someone full time on the staff.”

Mr Bird was a board-level IT director at a large corporate he before set up the company with his business partner Si-mon Albert. “There has been a need for IT support for as long as there’s been IT,” Mr Bird says. “Typically, the best support has been provided by large international businesses like IBM or Accenture who themselves serviced very large corpo-rates with all the customer service, pro-cess, systems and technology required to perform that function to a very high standard.

“There was a huge gap in the market because there were very few, if any, providers offering this level of service to home users and smaller companies with up to about 150 computers. Typical-ly, they were being serviced by one-man bands or small shops that didn’t have much behind them in terms of processes, technical sys-tems and customer service.

“What we’ve done is provide a whole infrastructure that allows a franchise operator to build a business. That’s the technology – the ability to manage and monitor any machine to diagnose and resolve problems more quickly and ef-ficiently – and efficient customer service and businesses processes where every stage of a job is tracked and document-ed.” The starting price for a franchise is under £15,000 plus VAT.

Pam Case and husband Phil launched the Warrington branch of the PC Sup-port Group in 2009. Mrs Case decided to leave her role as a marketing and communications manager for the Inde-pendent Buyers Association wholesale consortium, while her husband left his IT consultant role at MCP Microsys-

tems, to set up their franchise.“Leaving the safety of regular, guar-

anteed salaries and investing our life savings into a business was a huge decision,” Mrs Case says, “especially as the economy was heading into re-cession. The PC Support Group have been exemplary mentors from the beginning. We don’t have to consider things such as Google rankings, SEO [search engine optimisation], terms and

conditions, staff handbooks and hu-man resources – all expensive and

time-consuming commodi-ties. So the management

fee that we pay for our franchise is totally

eclipsed by what it offers.”

Franchising

Downturn not denting franchise opportunities

Hospitality brings some sunshine in economic gloomAmid a wider pattern of bleak and erratic economic forecasts, a microclimate of prosperity appears to have formed in the shape of hospitality development. While economic difficulties continue to blight many busi-nesses, for others they have created direct opportunities for growth, with a key driver being the price and supply of available development land.

One such business is Wigan-based specialist hospitality builder Denizen Contracts, which has completed more than a dozen new-build, refurbishment and fit-out projects across the UK, recording a sevenfold increase in turnover in just three years, rising past £27 million last year and remain-ing on a steep upward curve.

Denizen chairman Paul Bolton believes the firm’s performance, in stark contrast to many construc-tion operators, demonstrates the importance of identifying opportunities in a strug-gling economy. “When we established the business in 2007,” he said, “we set out an expansion strategy along very distinct lines – to deliver total hospitality development across a range of specialties such as construction, design management, value engineer-ing and investment and finance solutions.

“Without doubt, following such a niche approach has been pivotal in us secur-ing significant growth and bucking the industry trend. In spite of the economic uncertainty, demand for bespoke, high-specification hotel and restaurant space has remained buoyant.”

Despite the company’s recent success, Mr Bolton admits that the sector faces a number of challenges and says developers and opera-tors must remain responsive to change. “These are still

challenging times,” he said, “and although things are improving, one of the biggest stumbling blocks is still the lack of traditional bank debt. The relative lack of confer-ence and corporate hospi-tality business is another impediment. At one time, you might get companies holding strategy or team-building conferences in hotels for two days at a time. That market has gone for the moment, but there is some evidence that it is starting to return.

“However, we have always taken an optimistic view and, along with our core develop-ment partner Sanguine Hospitality Ltd, we have been able to identify opportuni-ties for land acquisitions at exceptional value. They are typically development sites that are already in financial difficulty, many in prime city centre locations, so you are getting good value.”

Among Denizen’s projects are three Hotel Indigo developments (a new hotel brand from Intercontinental Hotels Group) in Liverpool, Birmingham and Newcastle upon Tyne, all alongside Marco Pierre White restau-rants, while work will start on Hotel Indigo Manchester later this year. Mr Bolton believes such relationships have also been central to the company’s success.

“We have secured con-tracts with a number of high-profile hospitality brands,” he said, “and there is already a very healthy pipeline of new business that allows us to look forward to a future phase of development.

“It is fair to say that banks see a large degree of comfort in internationally branded hotels. So, while getting funding is probably the most difficult part, those relation-ships we have with the big hotel brands makes that journey a lot easier.”

Phil Bird

Wednesday June 6 2012 | the times

Business Insight1212

Renewables

By Helen Nugent

The moral case for renewable energy has been debated many times. Supporters point to the ethical advantages of gen-erating power from renewable sources. Meanwhile, naysayers allude to the

sporadic supply of weather-dependent energy sources, and cast doubt on the scientific commu-nity’s data on climate change.

But what of the economic case? According to a major report published in April, Renewable Energy: Made in Britain, the current UK turnover of renewables is £12.5 billion with a total work-force of 110,000. The export sum for all renew-able technologies was just under £1.6bn in the year 2010-11.

Although calculating the future scale of the re-newables industry is difficult, it is estimated that the sector’s turnover will reach £24bn over the next eight years. The Renewable Energy Asso-ciation (REA) projects that more than 400,000 jobs are needed to deliver the legally binding Eu-ropean Union (EU) target of 15 per cent of UK energy from renewable sources by 2020. If this rate of growth is achieved, as the EU says it must be, the UK turnover would be nearer £50bn.

“Given that [renewable energy] is one of the fast-est growing technologies,” said Gaynor Hartnell, chief executive of the REA, “there will be jobs and there will be people working for these companies who pay income tax while the companies will pay corporation tax. And if we don’t spend money pay-ing foreign companies for their fossil fuels, we can keep the money circulating in the UK economy.”

The report was produced by Innovas, on behalf of the REA. Innovas concluded that while renew-able energy accounts for more than 12 per cent of energy across Europe, and over 16 per cent globally, it makes up just 3 per cent in Britain. Renewable ex-perts are worried that a series of policy failures – in-cluding a lack of political support for biomass CHP (combined heat and power), onshore wind, solar thermal and liquid biofuels – will stymie growth.

“The Government gives the impression of bouncing around from one thing to another,” Ms Hartnell said. “It is committed to meeting the 15 per cent renewables target by 2020, but after that, the Government doesn’t want a renewables target, just a low-carbon target.”

Renewables practitioners are optimistic, given the entrepreneurial nature of British firms. In 2010-11, there were around 6,500 companies work-ing in renewable energy and its supply chains

across the country. According to Innovas and the REA, offshore/onshore wind power and its supply chain account for the most employment, at 31,400. Wind also had the highest turnover, at just over £4bn in 2010-11.

As far as sector turnover is concerned, over the same 12-month period solar power growth was an estimated 280 per cent, and it is thought solar pow-er employs about 25,000 people. Around 31,200 work in bio-energy technologies, with a combined turnover of £4bn. Exports for this sector reached £430m.

There is another benefit to an increased reliance on renewable sources of energy: bills. Ofgem, the gas and electricity regulator, reports that “higher gas prices have been the main driver of increasing energy bills over the last eight years”. The Commit-tee on Climate Change, which advises the Govern-ment on tackling climate change, says that “the av-erage dual-fuel energy bill for a typical household increased from around £605 in 2004 to £1,060 in 2010 […] by far the largest contributor was the in-crease in the wholesale price of gas, which added around £290 to bills”.

Compare this to what the committee said about low-carbon power: “Around £75 was due to policies that reduce carbon emissions. This included £30 to support investments in low-carbon power gen-eration, and £45 for funding of energy efficient im-provements in homes, which will also have helped to reduce consumption.”

Phil Murray, managing director at Romag, a solar (PV) photovoltaic panel manufacturer based in Consett, County Durham, knows all about the benefits of renewable energy. Production at the plant has tripled to meet the demands of the UK market which has soared since the introduction of the Government’s feed-in tariffs.

“Over the last year, because there has been such an increase in supply, the costs of PV have come down by about 50 per cent,” Mr Murray said. “His-torically, we have sold to wholesalers and distribu-tors. Moving forward we will still do that. But we have opened a warehouse in London and ultimate-ly we want to sell direct to the public […] solar is massive in the domestic sector. And feed-in tariffs have attracted a lot of businesses into the sector, for example, roofers and electricians.”

Jack Hardisty is technical director at Neptune Renewable Energy, based in Hull. His company has built a tidal stream energy device that will sup-ply electricity to The Deep, a spectacular aquari-um. The Neptune Proteus was installed in January 2012 and plans are being finalised for an array of devices to be deployed in the Humber within the next two years.

“Tidal stream power is viable,” Mr Hardisty said. “Although we charge the same as the grid would charge [for the electricity], the company [paying us] then attracts the carbon tax back. It’s a win-win, the customer pays less for their electricity than they do at the moment and it’s produced in a sustainable way. And, with tidal stream, we know we can predict the tides and therefore the power outputs way into the future.”

In Liverpool, a different kind of renewable pow-er is being harnessed by Agri Energy. In early May, it opened the UK’s largest used cooking oil bio- diesel plant. “We think this is sustainable because we are using waste material,” said Adam Baisley, head of strategy and business development. “For waste products to be recycled and not thrown away, that is an important thing.”

British businesses are doing their bit to promote and invest in renewables. Now it is time for those in Westminster and Whitehall to follow suit.

Economic case for renewables

Business Insightthe times | Wednesday June 6 2012 13

Cybercrime

By Rick Wilson...........................................

Crime gangs aren’t the low-life charac-ters in balaclavas they once were. With the computerisation of the globe, many have become sophisticated manipula-tors of cyberspace – and even more sin-

ister and damaging.Exactly how damaging is measurable by the

annual cost to the UK economy, estimated – by a joint Government and industry report last year – at a cool £27 billion, with three-quarters of this cost being borne by business.

The figure was quoted at the launch of the Government’s Cyber Security Strategy in No-vember, when the Prime Minister, David Cam-eron, stressed the Coalition’s commitment to working in partnership with the private sector to enhance the “top priority” of cyber security.

“We need to protect against the threats to our security,” Mr Cameron said. “Our strategy not only deals with the threat from terrorists to our national security, but also with the criminals who threaten our prosperity.”

So how has the fightback progressed in the half-year since then? The latest indicators are less than encouraging, with 85 per cent of busi-nesses saying they expect cyber attacks to in-crease over the next few years, according to a survey by Detica, the cyber business arm of BAE Systems. Asked about the likely trend in the number of attacks, only 6 per cent believed the

number of cyber attacks would remain constant and 4 per cent expected it to decrease.

With one-third estimating that an attack would cost their company over £50 million, it ap-pears that the Government has yet to arm itself adequately to win the war against cybercrime. And there are dire warnings aplenty.

Jim Murphy, shadow defence secretary, in advocating an advertising campaign to raise awareness of the cyber threat, said that busi-

nesses should be “kitemarked” on the robustness of computer systems. “It is not an exaggeration to say that the emergence of cyberspace crime is among the biggest changes in human history,” Mr Murphy added. “It could be the arms race of the 21st century.”

BAE itself, Europe’s biggest defence contrac-tor, said the Government was not doing enough to help businesses protect themselves from the growing threat of cyber attacks. “Our research indicates that business is showing a surprising willingness to engage and the onus therefore appears to be on the Government to enhance understanding of the problem by demonstrating the vulnerability of UK businesses to the cyber threat,” said Detica’s 2012 Cyber Security Monitor.

Oddly, however, the study found “a curious confidence” among 89 per cent of companies feeling themselves “very” or “fairly” confident that they were well equipped to prevent targeted cyber attacks.

Despite this overall confidence, appetite for engagement with the Government is strong, suggesting that companies believe there is still much to be understood. A quarter of businesses said they are already engaged with Government, with a further half saying they would be inter-ested in engaging but have not done so yet.

Meanwhile, the academic world may be rid-ing to the rescue. Eight universities conduct-ing world-class research in cyber security have been awarded Academic Centre of Excellence in Cyber Security Research status by GCHQ in

partnership with the Economic and Social Research Council’s Global Uncertainties Pro-gramme and the Department for Business In-novation and Skills.

The universities are expected to benefit the UK by enhancing the cyber knowledge base through original research, providing top-qual-ity graduates in cyber security, driving up the level of innovation and – crucially – supporting GCHQ’s cyber defence mission, helping make the UK Government, business and consumers more resilient to cyber attack.

The eight universities are the University of Bristol, Imperial College London, Lancaster University, the University of Oxford, Queen’s University Belfast, Royal Holloway University of London, the University of Southampton and University College London.

“We want to make the UK one of the most secure places in the world to do business, by in-vesting in the best expertise to keep pace with technological change,” said the minister for cy-ber security, Francis Maude. “These first eight centres will play a vital role in boosting research, expanding our cyber skills base and fostering in-novation in the field.”

A GCHQ spokesman said: “Our recognition of eight universities as academic centres of ex-cellence in cyber security research underlines our conviction in the vital role that academia has to play in nurturing future cyber security talent to support the UK’s prosperity in our cyber age.”

It’s war – against crime in cyberspace

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Wednesday June 6 2012 | the times

Business Insight14

Cybercrime

It is clear that today’s business world is dominated by technology. The op-erations of almost every company are controlled, managed or dictated by IT. The world rankings of valuable

businesses increasingly name agile, in-novative, young technology companies above the old and established. But there is a darker element of the connected world, one that impacts on every busi-ness.

The worldwide cyber threat is growing. NCC Group’s most recent Origin of Glob-al Hacks report identified a billion unau-thorised attempts at network access in the first three months of 2012 alone. But it is not just the quantity of hacks that is ominous – it is the form they are taking.

The future face of warfareAn incredibly intricate cyber attack has just made headlines across the world, with Flame malware discovered collect-ing massive volumes of sensitive infor-mation from machines across countries including Iran, Israel, Syria and Saudi Arabia. Flame is widely regarded as so sophisticated as to suggest state intel-ligence backing – and this is not a new idea. Two years ago the Stuxnet com-puter worm, one of the most sophisti-cated pieces of malware ever identified, was discovered surreptitiously targeting industrial control software. It was widely assumed to be attacking Iran’s nuclear infrastructure – and was agreed to be so complex that it was likely to have been launched with “nation-state support”.

In response, experts and public bod-ies have called for an international con-vention on cyber weaponry, like those currently held on chemical and nuclear arms. The message is clear: the greatest threats to national security now include attacks launched online.

Commercial targetsWho are the most obvious targets in this new arena of digital warfare? Busi-nesses. It is not difficult to imagine a scenario where companies are targeted as part of a wider campaign against the UK. Widespread disruption could be remarkably easy to inflict, and hacking techniques could become the most tar-geted and efficient means of crippling critical national infrastructure. What if businesses across the country were unable to use their everyday email ap-plications, even if just for a day? What if banking software was attacked, pre-venting transactions? There are serious implications for services we take for granted, such as power stations. Trans-port companies could be unable to op-erate, bringing the country to a literal standstill.

These are not the suggestions of sci-ence fiction: the list of cyber threats is unimaginably long and continually de-veloping. It spans sophisticated hacking techniques that exploit specific security vulnerabilities in networks or software, and the brute force of distributed denial of service attacks, which flood a server with requests until it collapses in a blunt form of digital vandalism. Cyber threats can be precisely targeted, with social engineering processes designed to take advantage of a specific individual, or they can be as indiscriminate as a piece of malware designed simply to replicate itself across any machine it touches. Techniques are evolving every day.

A duty to protectIt is clear, then, that a government with responsibility for national security must also take responsibility for business se-curity. To protect its country from the growing cyber threat, the UK Govern-ment must help secure its businesses in a world of new digital dangers.

However, businesses have a responsi-bility too. To retain the trust of customers and stakeholders, and to ensure that they do not take their data elsewhere, compa-nies have a duty to bolster and enforce their own information security.

How best to support these responsibili-ties for enhanced corporate cyber secu-rity? At NCC Group we have long called for “anti-hack grants” to support the private sector in bolstering itself against online criminality. Financial support is already available for businesses to invest in staff training and development or new research and services – spending that in-vests in the future of a business. It follows that those businesses requiring consulta-tive, advisory or straightforward financial backing in order to navigate a new and unfamiliar criminal landscape must be assisted.

A grant for businesses in need of great-er cyber protection could shore up a weak or flawed infrastructure, reducing the chance of data theft or malware damage. It could assist with staff training, boosting the weakest link in every security policy – human error or carelessness. It could examine the security of third-party sup-pliers, which frequently provide the easi-est route into a corporate network.

Businesses have access to huge vol-umes of valuable data that an “anti-hack grant” would help protect: customer con-tact details can be used to commit iden-tity fraud, bank account or payment in-formation can be used for financial theft, while intellectual property can have a significant value in itself. In the wake of a successful cyber attack there are other costs to consider, too – the impact on rev-enue if an e-commerce site is taken off-line, or the expense of incident response, investigating and fixing the damage that has been done and the flaws that allowed hackers access. Less tangibly, falling vic-tim to an online attack can have a signifi-cant impact on reputation. If customers do not feel they can trust a company with their personal information, they are likely to take it elsewhere.

It is clear, then, that enhanced cyber protection for businesses achieves ben-efits beyond a bolstered level of national security. A government focused on eco-

nomic stimulation should be encouraging private sector growth and development by helping businesses to secure their most valuable asset – their information.

The Government and the private sec-tor both have significant responsibilities in terms of information security, and the

Worldwide threat of online attacks

Last year saw the biggest security breach in US history. Epsilon, one of the world’s largest permission-based email marketing companies, announced that it had been the victim of a hack result-

ing in millions of names and email addresses being stolen. What was different about this attack was that it wasn’t the details of Epsilon’s customers that were taken, but those of its customers’ customers. While the reports vary on the exact number of email addresses hacked, Epsilon has over 2,200 global brands as its customers, and stores around 250 million email addresses.

Crucially, as a result of this breach, Epsilon’s customers – which include such high-profile brands as Marks & Spencer,

Mothercare, Lacoste and Air Miles – had to advise customers to be on the lookout for sophisticated phishing attacks using the hacked email addresses. Financial brands including Citigroup, Capital One and Visa were also affected – and these are companies governed by extremely strict security regulations.

As it turns out, robust security around your own boundaries means little if those compa-nies connected to you do not share your good practice.

Knowing where a customer banks, when they have been on holiday, that they shop at a particularly retail outlet or even that they have children makes it easy for criminals to develop highly targeted emails personalised to their victim. While commentators have argued that

the impact of last year’s breach was limited to sophisticated phishing attacks, there is no doubt that it caused considerable reputational damage to Epsilon. Its share price dropped by 5.5 per cent overnight.

Just a few months later, Japan’s biggest defence contractor, Mitsubishi, confirmed that its computer network had been attacked. The hack saw 45 servers and 38 computers in 11 locations being hit with 50 different viruses, including eight Trojans and one that logged the keys typed on a keyboard. Some of the affected computers were then forcibly connected to overseas websites resulting in loss of data. While never confirmed by Mitsubishi, rumours persist that the data loss involved nuclear power plant designs and safety plans.

Potentially worth billions to the criminal or terrorist underworld, it is easy to extrapolate the scenario if those plans fell into the wrong hands.

Governments are increasingly transparent about their prioritisation of cyber security, but this case underlines how much governmental and even national security is in the hands of private contractors. Once again, the integrity of one organisation’s security – Mitsubishi’s – impacted on that of an organisation it was working with – the Japanese government. Any kind of third-party supplier is vulnerable.

Take the case of Lockheed Martin, the largest defence contractor in the United States. Last year, Lockheed Martin confirmed that, despite high levels of security internally, it had

2011 hack the biggest security breach in US history

Businesses are the most obvious targets in a new era ofdigital warfare as the worldwide cyber threat is growing

Businesses have access to huge volumes of valuable data

Business Insightthe times | Wednesday June 6 2012 15

Rob Cotton, CEO of NCC Group

Worldwide threat of online attacks

been the victim of an orchestrated hack. In a statement, the company described the attack as “significant and tenacious,” but said that its IT security team “detected the attack almost immediately and took aggressive actions to protect all systems and data”. Lockheed Martin develops and manufactur-ers everything from Trident missiles to F-22 fighter jets for the US Department of Defense.

The company had significant levels of security in place. It is thought that hackers were able to gain access to the network via Lockheed Martin’s Virtual Private Network (VPN). The VPN is secured by RSA SecurID hardware tokens. These key fobs produce a random secure code that needs to be inputted during the login process. Attackers apparently had access to not just the factory encoded random codes, but also the serial numbers and the underlying algorithm used

to secure the devices. By the process of elimination, it appears that the same hackers were behind another successful breach a few months previously. This was an attack on RSA – the company that manufactures SecurID. By targeting one company, cyber criminals were able to gain access to another.

These examples show how robust IT security must to be applied to an entire supply chain to comprehensively protect an organisation, whether it is a government or a private sector business. The impact of a data breach can be broad, long-lasting and time-consuming and expensive to repair. Supply chains can be incredibly complex, covering accountants and marketing agencies, soft-ware developers and legal advisors – if they have access to a business’s information, they are a potential weak link. Comprehensive information security clearly cannot stop at the front door.

challenges are great. The Cabinet Of-fice has estimated that the UK economy loses £27 billion every year to cybercrime, a tangible measure of the value to be claimed back if businesses shore up their defences now. Enhanced cyber protection for businesses is not only a duty to the

security of stakeholders and citizens, but also an investment in our country’s future.

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