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Financial andProfessional ServicesStrategy and ActionPlan for England’sNorthwestSummary2010

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For the purposes of this strategy the FPS sector encompasses a wide range ofbusiness activities, including:

• The whole of the financial services sector including banks, building societies, insurance and pension companies, financial intermediaries such as insurance brokers and financial advisers, venture capitalists, fund, asset and wealth managers, stock brokers and investment companies, and

• Key parts of the business services sector, broadly comprising the professions, including legal services, accountancy, management consultancy, recruitment consultancy, and property services.

Financial and ProfessionalServices

Financial and Professional Services (FPS) offer great potential for growthin the Northwest. The sector has grown significantly in recent years, withemployment increasing by over 26%, the number of businesses risingby 36%, and GVA growing by nearly 50% between 2000 and 2006.Despite the economic downturn, which is having a considerable impacton the FPS sector, it is predicted to grow further in the medium to longterm. As it does so, the Northwest has a number of regional strengths onwhich to build.

This Strategy, which was developed by the Northwest RegionalDevelopment Agency (NWDA) in conjunction with public and privatesector partners, provides a framework for action to support the sector’sgrowth over the next ten years. It contains a three-year action plan, whichwill be reviewed on an annual basis.

What does FPScover?

Potential for the Northwest


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The UK policycontextThe financial services sector (and related professional services) has been identified byUK Trade and Investment (UKTI) as a key growth sector for the UK. In 2006 UKTIdeveloped a Marketing Strategy for the sector, with a focus on London being supportedby strong regional centres throughout the UK, including Manchester and Liverpool.The Chancellor’s Financial Services Sector Advisory Board played a key role in thedevelopment of the UKTI Financial Services Marketing Strategy. The NWDA represents allnine of the English Regional Development Agencies on the Chancellor’s Advisory Board.

The regionalpolicy contextThe 2006 Regional Economic Strategy for the Northwest identified Business andProfessional Services (BPS) as a priority area for growth in the region – FPS are keysub-sectors of BPS.

The regional policy context for FPS also includes the Northwest Enterprise Strategy, theNorthwest Innovation Policy, and the Internationalisation Strategy, which describes FPSas a key priority for increased international focus, as far as inward investment and tradeis concerned.


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An overview of theFPS sector

The financial and professional services industries are amongst the most important in the UK.The sector has been growing at more than double the rate of the economy as a whole formany years, with its productivity rising at more than three times the average. The financialservices sector is the single largest contributor to the UK balance of payments.

The National picture

England’s Northwest has one of the largest financial and professional services sectorsoutside London: in 2006 it employed 288,802 people, accounting for 9.6% of jobs in theregion. Northwest FPS sector employment grew by 26% – 15% above the UK FPS average –between 2000 and 2006.

In terms of GVA, the FPS sector has seen faster growth than any other sector in theNorthwest, going from £6.5 billion in 1998 to £14.05 billion in 2006. However, GVA per headwas £48,652 in 2006, which still lags behind the UK average for the sector.

Geographically, Greater Manchester accounts for 44.7% of jobs in the sector and 47% of theregion’s GVA. Substantial and growing concentrations of activity are also to be found inCheshire, Merseyside and Lancashire. The region has a broad base of FPS firms, withbusinesses offering a wide range of services both business-to-business and business toconsumer, and developing expertise in a number of niche areas. The number of FPSbusinesses in the region has grown significantly since 2000, and includes big names suchas Bank of America/MBNA (Europe), Co-operative Financial Services, Royal Bank ofScotland, Barclays, Bank of New York Mellon, PWC, KPMG, Deloitte and Ernst & Young.

The Regional picture


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The overall prospects for the FPS sector are positive in the long term. While the economicdownturn is expected to slow growth rates considerably for the next two to three years,leading to a potential reduction in the number of FPS projects by 20-30%, inward investmentwill continue to be a driver of economic growth for the sector in the Northwest, and soattracting inward investment will continue to be a priority for the Agency and its partners. It isanticipated that growth in outsourcing, particularly in investment management, and in thelegal and banking sub-sectors may present opportunities for the Northwest.

Regional strengths

The FPS market will continue to evolve, driven by factors such as changing demographics,new legislation, and the current economic downturn. Climate change may also have anincreasing impact, especially on insurers.

In this changing market, the Northwest will benefit from a number of strengths:

• Strong links between firms and sub-sectors within the region – especially in Manchester and Liverpool, through bodies such as Pro-Manchester and Professional Liverpool

• Access to graduate labour, with twelve universities in the region

• Cost competitiveness, particularly in comparison to London

• Regional expertise in a number of niche areas, such as wealth management, private equity, AIM listings, Public Private Partnership (PPP) and Private Finance Initiative (PFI)

• Manchester’s growing reputation nationally and internationally as an FPS centre

• A good track record in attracting inward investment

• Good access to global business locations, especially via Manchester Airport.


Strategic Framework

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Our vision:

An internationally recognised, competitive and vibrant sectorcomprised of innovative, market-focused businesses, underpinned bytalent and expertise. Manchester will be a leading European centre,complementing London’s position as a global hub, and it will besupported by Liverpool and Chester, as thriving FPS centres in theirown right.

The desired strategic impact of the strategy is:

• To increase the total GVA generated by the FPS sector in the Northwest.

Realising the vision and increasing the productivity of the sector will require a focus on the following aims:

Aims• Increase the GVA per head of the sector by encouraging higher added-value

employment, and raising levels of innovative activity in the sector in the region

• Increase the number of people working in the sector by attracting new investment, supporting the growth of existing businesses, and encouraging the start-up of new businesses.

Strategic ThemesA number of key strategic themes have been identified upon which activity andresources will be focused. These are:

• Marketing/Image

• Investment

• Skills

• Innovation and Enterprise

• Markets

• Support

• Infrastructure.

Within these themes the Agency and its partners have identified a number of objectivesand actions at a sector and sub-sector level.

Strategic impact


A recent study has identified five sub-sectors within FPS in the Northwestwhich offer significant growth potential interms of GVA growth. These are:

Priority sub-sectorsin the Northwest Accountancy

The region is already home to over 3,000 businessesin this sub-sector. In the medium term, the total UKmarket for accounting and related services isexpected to increase significantly, with the strongestgrowth occurring in the corporate finance andbusiness recovery sectors. Specific objectives forthe Northwest in relation to accountancy include:

• Increasing awareness nationally and internationally of the Northwest’s strengths in corporate finance, risk management and specialist advisory services

• Developing operations and service offers which can be delivered on a national as well as regional basis

• Supporting the growth and sustainability of SMEs through exploitation of new markets and business improvement.

InsuranceThe Northwest has a long history as a centre forinsurance and related activities – in 2006, theinsurance sector in the Northwest employed 33,693people. Non-life insurance in particular is expectedto see stronger than average growth, particularly asthe economy recovers in the medium to longer term.Specific objectives include:

• Safeguarding and building upon existing major operations in general and life insurance

• Increasing inward investment into the Northwest both through relocation or expansion from elsewhere in the UK, and from overseas donor markets

• Developing the skills base in order to meet the needs of employers.

Banking/FinanceThis is also a major employer in the region, withnearly 70,000 people working in the sub-sector in2006. Many commentators expect that growth inretail and commercial banking will be strong oncethe effects of the current downturn have workedthrough. Specific objectives for the Northwestinclude:

• Working to retain existing functions and services during the downturn, as the region is relatively exposed

• Exploiting opportunities in new and emerging product areas and markets

• Increasing productivity and growth in higher added-value employment through the expansion of existing clusters.

Legal servicesThe region now accounts for more than one in eightjobs in the UK in the legal services sub-sector. Whilethe downturn is creating a great deal of uncertaintyin the market, there is no doubt that, once it hasworked its way through, leading law firms in the UKwill continue to grow. Specific objectives include:

• Broadening and deepening existing specialisms in orderto develop nationally recognised centres of excellence, complementing the London offer

• Raising the sector’s profile abroad and maximising internationalisation opportunities

• Helping small and medium-sized practices adapt to changes in the industry.

ManagementconsultancyOver the 2000-2006 period this sub-sector almostdoubled in size in the Northwest, and further growthlooks promising in the medium to long term.Specific objectives include:

• Promoting the expertise of the region’s consultancies nationally and internationally, to secure a growing share of new markets

• Reducing the leakage of business to firms based outside of the Northwest

• Encouraging stronger links between consultancies and the rest of the regional economy and supporting cluster development.

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Priority Action Plan

The FPS sector in theNorthwest is characterisedby common issues andchallenges. The actions setout below will help tosupport businesses acrossthe sector.

Marketing/Image1. To raise the profile of the Northwest FPS sector regionally and nationally

• Organising a highly targeted marketing campaign within the Northwest (to retain FPS business in the region) and in the wider UK (to promote the Northwest and specific FPS strengths and expertise).

Investment

2. To encourage further investment from overseas markets and existing investors in the Northwest

• Proactively targeting potential inward investors from key target countries and regions, including the US, India, the Gulf States, Western Europe and Australia.

3. To attract investment into the Northwest FPS sector from the rest of the UK

• Proactively targeting inward investment opportunities from elsewhere in the UK, including the relocation of back-office or other functions from London and the South East.

Skills

4. To expand the supply of qualified professional and technical staff to meet the currentand future needs of the sector

• Developing linkages between firms and regional universities in order to enhance the employability of accountancy and finance graduates available to Northwest firms

• Where there are known gaps, actively promoting accountancy, banking/finance and insurance as an attractive career option, and raising the awareness of the role of the professions within schools, sixth form and FE colleges and other bodies

• Supporting SMEs (especially smaller legal and accountancy practices and IFAs) in diversifying and responding to market challenges.

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Innovation and Enterprise 5. To increase the level of innovation and enterprise taking place in the FPS sector in

the region

• Developing and delivering an FPS component of the Northwest Innovation Policy

• Exploring the use of lean techniques in the FPS sector.

Markets6.To increase Northwest businesses’ market share of regional, national and

international FPS business

• Supporting the expansion of specialist services linked to growth sectors

• Exploring the potential of niche areas in banking and associated professional services within the Northwest, eg carbon emissions advice and trading services, ethical banking and Islamic finance.

Support7. To provide businesses in the sector with access to the right business support

• Promote the Information, Diagnostic and Brokerage service which Business Link provides in order to increase coverage of the FPS sector in the Northwest

• Support smaller firms to grow market share through supply chain development and access to markets outside the region.

Infrastructure8. To ensure that the sector has the right infrastructure to support its growth

• Work in partnership with the private sector to ensure the provision and availability of a variety of property offers to meet the needs of businesses.

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Monitoring andImplementation

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This Strategy was developed by the NWDA in consultation with a wide range of publicand private sector organisations. The Northwest FPS Steering Group, a cross-sector, non-executive private sector body brought together by the Agency in 2007, provided guidancein developing the Strategy.

A working group involving key public and private sector stakeholders will co-ordinate thedelivery of the Strategy.

Implementation

It is vital that the implementation of the actions outlined inthis Strategy is monitored and evaluated, to ensure that theStrategy’s objectives and the sector’s potential are beingrealised. Key performance indicators include:

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The number of business units

The number of business start-ups and their survival rates

Levels of innovation as measured by the parameters of the Community Innovation Survey

Export levels

The number of inward investment projects and jobs created

Number of businesses assisted through Business Link Northwest

Business Link Northwest customer satisfaction results

PRIMARY INDICATOR:GVA per head and total GVA for FPS

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The full version of the FPS Sector Strategy document can be downloaded atwww.nwda.co.uk/fpsstrategy


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NWDA J12-28
