North the engine of recovery

THE North of England has to be the engine of recovery for the UK economy, a partner at Goldman Sachs told an audience of influential business people at the launch of the Yorkshire Post Business Club.

Financier Richard Tufft shared a platform with industrialist Chris Rea at the region’s new forum for corporates, professionals and entrepreneurs to share the latest ideas in business thinking.

Key issues on the agenda were growing a business, exporting for the first time, access to finance and the importance of corporate social responsibility – all set against a background of shifting economic power.

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Mr Tufft, co-director of European equity research at the investment bank, said growth in the UK and Europe will be “relatively muted” in the future as emerging market economies drive global growth.

He said exposure to growth markets, the ability to pass through raw material prices and cash generation will define the winners in this environment.

Arif Ahmad, a partner at PwC, asked if Yorkshire is well placed to drive the export-led recovery.

Mr Tufft, originally from Lancashire, replied: “The North of England in general has to be the engine of recovery. For too long, the North has been seen as the handicap, the thing that’s dragging the rest of the UK economy down and as a passionate advocate of the North, I think Yorkshire and the manufacturing base here should play a key part in that.”

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He added: “The ability of manufacturing businesses to take that quality and explode onto the global stage is easier now than it has been for a while.”

Mr Rea, founder of Rotherham-based AESSEAL, told the audience how he bought a small business in 1979 and transformed it into a £100m-turnover group which sells to 93 countries.

He invested “massively” to support international growth, developed a franchise feel to the expansion and concentrated on hiring great people.

He said successful exporting requires a state of mind: “You go, you talk to people, you listen to people, they tell you what they want, you listen and if you can do it, you give them what they want.”

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Jason Clarke, media manager at Yorkshire Bank, asked Mr Rea about his defining career moment. Mr Rea said it was the realisation after buying his company in 1979 that he could trust nobody.

He took to doing his own accounts and commercial contracts, but said he has since learned to discriminate between good and bad and trust some people again.

Colin Glass, a partner at accountancy firm WGN, asked if the Government is using enough influence to increase bank lending to support growth among SMEs.

Mr Rea said the wider problem is that politicians work to five-year parliamentary terms when a 25-year plan is needed to rebalance the economy towards manufacturing.

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Mr Tufft said: “The banks need to make sure their lending practices are as flexible and as open as possible.

“It is the preserve of the Government to make sure there’s a regulatory structure that allows businesses to flourish in terms of taxation and it’s also down to entrepreneurs and the people in this room to generate businesses that have the growth opportunities that demand further capital. “When those three things come together, that’s when you start to see economies move forward.”

Todd Hannula, a US-born social entrepreneur, said SMEs could benefit if more Britons invested in business rather than property.

Mr Rea said: “If there’s a vacuum in lending to small businesses between £1m and £10m or start-ups, then somebody somewhere will fill the vacuum.”

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Mr Tufft said Goldman Sachs has tried to institute some of that culture through its 10,000 Small Businesses mentoring project, which started in Leeds and has since launched in Manchester.

He said: “We recognise that stimulating SMEs from below, providing them with not just capital support but also mentoring and some business advice is a critical function for developing economic growth in the UK.”

Sharon Orr, corporate responsibility manager at Aviva UK, asked what trends the US bank has seen in investor demand for corporate social responsibility.

Mr Tufft said: “From an asset management perspective, there are more and more money mandates that are attracted towards responsible companies.”

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He added: “What you can clearly see over the last five years is that companies that manage themselves along more of a CSR line are more successful on average.”

Mr Rea said CSR is an integral part of AESSEAL and without it no business can claim to be excellent.

Asked about the issue of corporate mistrust, Mr Tufft said: “Corporate mistrust ebbs and flows. The way you respond is by maintaining a standard of excellence and by serving your clients in the way that delivers the best for them.”

* the Yorkshire Post Business Club is derived from the newspaper’s Excellence in Business Awards.

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It is open to companies shortlisted over the last five years, our main sponsors and special invitees.

Last week’s launch event was attended by chief executives, chairmen, owner managers and leading professionals.

Editor Peter Charlton said: “We can all learn from those who have demonstrated excellence, no matter the field in which they operate.

“Innovation, entrepreneurial skill and daring are among the qualities that define the best of the Yorkshire business community.”

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