GLA Economic and Social Development Committee by linxiaoqin



                         Economic and Social Development Committee
                                      10 February 2004

Mike Tuffrey, Chair: Our main business this morning is to take a look at inward investment. It is a
topic that has been on our list of interests for a while.

Rob Lewtas, Business Retention Manager, LDA: I am Rob Lewtas. I am responsible for inward
investment, business retention and trade for the London Development Agency (LDA).

Aman Dalvi, Chief Executive, Gateway to London: My name is Aman Dalvi. I am the Chief
Executive of Gateway to London. It covers inward investment and business retention in the Thames

Andrew Cooke, London First Centre: I am Andrew Cooke, Director of Strategy Marketing at
London First Centre (LFC).

Robert Rothenburg, Senior Partner, Blick Rothenburg and London First Centre Board
Member: Rob Rothenberg. I am Senior Partner at Blick Rothenburg Chartered Accountants. I am
also a Board Member of LFC. My firm is one of the larger independent firms looking after inbound
businesses coming into London and the UK.

David Main, South London Business: Good morning. David Main, Chief Executive, South London
Business. We are the agency responsible for inward investment and business retention in South

Mike Tuffrey, Chair: Let me kick off, if I may, with an opening question to set the scene for us. We
see that while the UK has kept its number one spot in Europe, in terms of attracting investment, the
proportion is down. I wondered if you could – starting with Andrew – set the scene for us, in terms of
what are the actual trends in the UK and what the implications are for London?

Andrew Cooke, London First Centre: I think there are three key reasons for the decline in
investment over the last couple of years. One is straightforward economic conditions post-September
11 and the downturn in the global economy after the effects of September 11. Given that North
America accounts for probably 60% of investment into the UK, we had a significant downturn in that
particular market. It went down by about 50%. That really accounted for the majority of the

The second factor is really increased competition that we are seeing, in terms of investment coming
into Europe, particularly with more investments going into non-EU countries, particularly Eastern
Europe. The large-scale capital-intensive projects are shifting eastwards. Increasingly back office
projects are heading in that direction as well. The marketplace is becoming much more competitive.

Thirdly, and to a lesser extent, over the last couple of years there does seem to have been some
erosion of the UK’s competitiveness. We certainly get feedback in terms of increasing red tape,
increasing costs within the UK, increasing insurance contributions. The working transport
infrastructure across the UK, not just in London, is getting press coverage worldwide now and which is
having a negative impact on investment to the UK. Those I think are the trends that we are seeing
UK-wide. The story may be slightly different for London. Whereas the UK share has diminished quite
significantly, London’s share in the same period dropped from 8% to 5% between 2001-2002, but has

                        Economic and Social Development Committee 10.2.04
actually bounced back last year and is up to 7%. We have actually increased our market share over
the last year, which is good news.

Mike Tuffrey, Chair: Those percentages are a percentage of the UK or of Europe?

Andrew Cooke, London First Centre: European investment into the UK.

Mike Tuffrey, Chair: So those trends…

Robert Rothenburg, London First Centre: Can I add one other item? It is overall the level of
taxation. Because whilst UK tax rates have not had headline increase in rates, or headline decrease in
rates, spectacularly for larger businesses, the rest of European tax rates have been coming down.
Therefore, the competitiveness that the UK used to have, in respect of tax, is no longer the same
advantage that it used to be.

Mike Tuffrey, Chair: Though UK corporate tax is still less, on average, is it not? The red tape effect
is more an EU phenomenon.

Robert Rothenburg, London First Centre Board Member: The corporate tax rates have come
down significantly in many other countries in Europe. Indeed, the headline rates in some countries are
now lower than the UK’s 30% corporate tax rate.

Mike Tuffrey, Chair: Okay. What are the implications then in terms of the sorts of sectors that we
ought to be promoting? If there is a trend – major capital investments, car factories, as you said, to
non-EU countries presumably around wage rates and other costs – what are the implications of those
macro trends for London’s own position?

Andrew Cooke, London First Centre: I think the implications are that London needs to concentrate
on its areas of strength; sectors where it has particular areas of expertise. So financial and business
services should definitely still be a focus. London is a premium product and it cannot compete on
cost, so we have to focus on value-added projects. It is really the same products of the UK-wide now.
Regions of the UK are attempting to move up the chain from that perspective, given that these
manufacturing projects are no longer going to be coming to the UK. We think that we need to market
London more aggressively to get the message out, in terms of what London has to offer. Also, trying
to diversify the London offer to make it clear that we are not just talking about central London, but
the totality of the London area and the advantages that central London and the gateway to Greater
London have as well, in terms of being able to offer a range of options to clients. There is a
perception that London is an expensive city and we need to do whatever we can to make it clear that
London is a cost competitive location. There are options in the Thames Gateway or other outer areas
of London which will consider a variety of client needs.

Mike Tuffrey, Chair: That is the position. What about actual sectors? We noted that, in the UK, the
top five sectors for inward investment were software, automotive, business services, electronics and
pharmaceuticals. Yet within London, obviously the financial services sector is the biggie, and would
be the obvious one to go after further, if indeed there is anything further that can be done. Can you
tell us, from a sector point of view, what your strategy is?

Andrew Cooke, London First Centre: Yes. Well, we will continue to focus on sectors that we have
in the past. Financial and business services will be key there. 25% of the investment that we have
brought in to date has been in that sector. The Information and Communication Technology (ICT)
sector has been very significant over the last few years and will continue to be so. 45% of our
investment, since 1994 when we were set up, has been in that particular area. Much of that
investment has been supporting the business services sector, with software for departmental services
and other support services to support the city, and has been a major contribution.
                        Economic and Social Development Committee 10.2.04
We are looking to diversify into other sectors. In creative industries there are major opportunities. We
are looking particularly at film production and post-production areas. Increasingly, we are looking to
see where there are global trends that we can capitalise on. We are looking for niche opportunities
where there may be changes in legislation which will impact on investments. There are potential
changes around gambling within the UK, which seems a niche opportunity which we will focus on. I
have been talking to major casino operators in the US about their plans to move into the UK market.

Mike Tuffrey, Chair: I was struck in the written evidence that you gave us that a forward projection
over a three-year period is for 225 projects, but creating 6,700 jobs. That compares with statistics you
gave us of 650 projects previously creating 34,000 jobs. The point that struck me was the actual
number of jobs per inward investment project. The ratio seems to be shifting. Is that fair - that the
next phase will actually not be very labour intensive?

Andrew Cooke, London First Centre: There is a global shift towards smaller projects. The days of
large 500-job projects coming to the UK I think are over. Certainly in a European context, more and
more projects will be higher up the value chain and small in nature. We are looking at European
headquarter functions which will be higher up the value chain, but will probably be relatively small
numbers of jobs. Those projections or figures we gave for investment were since 1994 and not for the
last three-year period.

Mike Tuffrey, Chair: Yes, for all of the time. Okay. The other point you made in your written
evidence to us was that the creation of the Greater London Authority (GLA), and that principally was
the arrival of the LDA, allowed you to tie your strategy more closely to a London agenda. There I was
interested in how the new economic development strategy is emerging and of the refocusing of the
LDA away from the sector and spatial strategies as an organising principle. How will that affect your
approach? Perhaps the LDA will want to come in as well on this. At some point it would be good to
take a sub-regional East London/South London perspective on this opening scene. Let us hear a
particular strategy point and then open it up for more discussion.

Rob Lewtas, LDA: Just on the shift and the sector focus, within the two – the LDA and the LFC –
there will still be some maintenance of links between the strategic thrust of LFC and the sector
priorities that we have and have had, really to anticipate changes in trend, as we have talked about
before. If we see something on the horizon that would have a significant change in that sector or
industry, we want to anticipate that high enough upstream so that we can re-gear and refocus our
efforts so that we can tackle that at an appropriate time.

Gaming or gambling legislation is an ideal example of that, even though it is not one of our priority
sectors yet. The change in legislation has presented a real market opportunity. LFC has seized that at
a point where we can actually start to intervene at a point where we can make a real difference. That
has already resulted in some quite significant investment already. There are potential investments
hinging on the change in legislation.

In things like creative industries, life sciences, production industries and so on, there will be changes
that are not quite on the horizon that we want to anticipate well in advance so that we can re-gear
accordingly. There will still be a maintenance of links in terms of the sector interventions that we are

There are other areas which Andrew mentioned around the European headquarters, so looking at
where potential demand could be as well. And if it is not there, how would you stimulate demand?
Does that answer your question?

Mike Tuffrey, Chair: Yes. What was behind it was trying to get some sense of whether essentially
the strategy is to go after whoever wants to come - to make the best possible gains but essentially,
                         Economic and Social Development Committee 10.2.04
one is just going out to get inward investment - or whether it is possible to actually be more pushy
about targeting sectors and trying to tie it in to some sort of strategy of where we are trying to take
them. Really, in a sense, whose foot is the boot on? Do have a response to that?

Rob Lewtas, Business Retention Manager, LDA: If I can come in, and then I think Andrew will
probably want to add to this. In the environmental sector we are trying to ensure that the objectives
of the LDA and our partners are met in terms of targeting of companies. Also, the wider context of
how we want to spread the benefits of inward investment more widely across the wider London
region. If we look at the offer… The Thames Gateway, for example, is the ideal location for some of
these environmental technology based companies. LFC has embarked upon quite an intensive drive
to identify European environmental companies who are real cutting edge industry leaders in that
particularly sector. It has a couple circled here and the environmental leaders of London as a whole.
But it is also trying to attract the investment level that will help underpin some of the future strategic
drives in that particularly sector. Andrew, do you want to explain the type of companies in that
industry that we are talking to?

Andrew Cooke, London First Centre: Yes. We are talking to major companies, particularly in
Germany who are at the forefront of environmental technologies and recycling. For example,
companies that are recycling fluorescent light tubes, and are looking at the opportunities in the
European or the UK market and the changes in legislation, in terms of the quotas that need to be met
in terms of recycling within the UK. We are taking to some of the major waste recyclers in the US as
well who are keen to explore opportunities in the UK market. They see us as mechanism to guide
them through the process and put them in touch with the people they need to talk to. It is facilitating
their entry into the marketplace and demonstrating the opportunities that there are, particularly in
terms of sites and premises in the East London area.

Jennette Arnold (AM): As you know I am really very interested in the landing in the relationship,
and not just about the offer. You talked about the new legislation about gambling and the sense that
there are big casinos in the US who may well want to come and make use of that. Can you just take
us through then, and tell us about that? You have spotted the opportunity, but what I am interested
in – and what your average lender will want to know – is how will you make a relationship with
identifying an opportunity to offer and the relationship to them? Because at the end of the day,
when you bring this offer and land it in say Hillingdon, can you say that Hillingdon Council and the
sub-regional structure there will have been part of this activity? Can you actually understand where
the jobs are going to go, the benefits, and any problems that emanate from that? That is what would
be interesting for me and others coming out of this discussion, rather than the facts and the figures
and the stuff which we can read about in the news. It is about the stuff that affects people’s lives
which we do not hear a lot about.

Andrew Cooke, London First Centre: In terms of the process, with gambling for instance, what we
did there was identify the changes that were taking place in the legislation and what opportunities
that would give rise to within the UK and London and pull that together into a proposition which we
then take to the marketplace and sell to the major casino operators. We did that, and went to the
major casino convention in Las Vegas and met with the major players there …the leading players from
London could really talk about what those opportunities are, so we presented the London piece. We
have a leading law firm and accountancy practice who understand what is behind this and what the
implications are for those companies moving into the area. Also, the number of key developments in
London which they could potentially capitalise on, such as the Dome or Wembley, or other options as

We therefore then generated interest from those companies. We then held a further seminar in
London a few weeks ago at the major casino exhibition for Europe which was taking place at Earls
Court. We met those companies again, and have begun to have conversations with them about what
the opportunities are in London, what the legislation means, what the Mayor and his advisors
                         Economic and Social Development Committee 10.2.04
thoughts are on that particularly industry. We have set up some meetings with the Mayor’s Economic
Advisor so that they understand what his perspective is. We are now beginning to put them in touch
with sub-regional partners and developers in those areas.

Our relationship with sub-regional partners: they are our delivery mechanism on the ground.
Assuming there is a particular interest in a part of London, we would further that inquiry through to
them so that they can plug those investors in with the public sector and local authorities, and also
other business support agencies to get a feel for what is available.

Jennette Arnold (AM): That is such a top-down approach. You talked about the sub-regional
partnerships almost as though they were at the end of the food chain.

Andrew Cooke, London First Centre: No, they are engaged at the beginning of the process as well,
in terms of building the offer in the first place.

David Main, South London Business: I was just anticipating Jennette’s question. I think Andrew
was giving a view from an LFC perspective and starting at that point. But it also starts at sub-region.
We spend a lot of time with our boroughs, finding out what their attitude is towards inward
investment, what type of companies they might want. We work with their Economic Development
Departments – although not all of them have very sophisticated Economic Development Departments.
But we work with members and officers to try to find out what their requirements are. We build that
up and we pass it up to Andrew. That way, when LFC are out there, abroad, then they know what
South London wants within South London.

What would be suitable for Croydon or what Richmond might want may be different. You can imagine
it is quite different what Richmond sees as good inward investment and what Croydon sees as inward
investment could be quite different. Then when the leads come back from LFC… we do not see it as
our job to go flying all over the world. It would not be cost effective to have every sub-region and
borough doing that. It makes sense to centralise that. Although we will sometimes accompany the
LFC on a trip, if it is particular to a sector that we are interested in. We are very interested in Asian
businesses at the moment. They seem very attractive to South London. They find it an environment
that is attractive to them. So going to Asia for something that seems appropriate to South London,
we would go along.

We are not sitting there inactive. We are constantly pushing forward our boroughs and our
sub-region. In a bit of what you might call healthy competition – we may come onto that later – but
healthy competition with the other sub-regions to push ourselves forward and push our offer forward.
When it comes back with a lead, we will then match it up. If it is appropriate to us we will push it
through vigorously. I think that is working well. It maybe did not work terribly well a couple of years
ago, but we have new arrangements. I have seen the old arrangements and the new arrangements
over the last couple of years. I am pleased with the way it is working in South London.

Jennette Arnold (AM): Thank you for that. It was one of the weaknesses that we recognised in the
first Economic Plan because there was so little though given to that need for the landing and for
sub-regional structures. So you are saying that, over the years, that that is getting better?

David Main, South London Business: Yes indeed. In fact in the LFC finances a full-time inward
investment manager in South London Business. Although they pay, he is situation in South London
Business. It is an excellent arrangement. The links are very strong. That is starting to work well.

Aman Dalvi, Chief Executive, Gateway to London: As Members know, the use of them in the
Thames Gateway has probably got to double its priority in terms of regeneration with the possible
production of 100,000 homes and the creation of 250,000 new jobs over the next 10-15 years. One
of the fundamental difficulties we suffer from is the lack of transport infrastructure. Also coming with
                        Economic and Social Development Committee 10.2.04
that is the shortage of skilled communities. Andrew a minute or so ago mentioned the fact that one
of the LFC priorities was looking at casinos. Something like that will not benefit the Thames Gateway
at all. In fact if you look at the evidence that has been presented by the LFC, if you look at the dark
shading, it shows a concentration of their output in the centre and the west of London. That is not a
criticism of LFC, but it is to reiterate the position that we have taken at Thames Gateway: to build a
transport infrastructure. You are not going to attract larger companies into the area unless this
particular issue is addressed.

Chair, I wanted to pick up on one issue that you raised, and the question: should the strategy be
towards whoever wants to come, or should it be targeted towards the sectors? My view is that the
LDA does play a very important public intervention role in the buying of sites. In Thames Gateway
alone, the LDA owns around 600 acres of land. Therefore, if that intervention was not available,
developers would come in, and most of them would want to build sheds. A classic example is a large
developer in the London Borough of Barking and Dagenham who wanted to build a shed. He
purchased the land, it went to planning appeal, and the developer won the appeal, irrespective of the
borough’s wishes, to have manufacturing in there. If you compare and contrast that to the Beam
Reach site in Barking and Dagenham and Havering which is 80 acres, and the White Hart Triangle Site
in Thamesmead which is 40 acres. Here the LDA has said that that the sectors that we are targeting
are manufacturing. That is an importance: that there is that degree of public intervention to make
sure that manufacturing is there.

It is also a very fine balance. Andrew has argued how difficult it is to attract overseas companies to
invest into the area. To create manufacturing jobs which are in excess of 100 or so is a thing of the
past. Although we manage to attract one or two organisations. Like I said, it is a thin line. My view is
that yes, you should allow manufacturing into the sites that I have mentioned, but you should not
then narrow it down and say that it must be high-tech manufacturing. Quite often you get low-tech
manufacturing, which may be conveyor belt jobs. But they nevertheless are jobs as well. That is
where I would draw the distinction. Yes, we should attract manufacturing, but it can be low-tech.
You cannot hold land forever, holding out for high-tech manufacturing which may never arrive.

John Biggs (AM): I was interested in quickly pursuing two lines of questioning. The first is about
casinos. I read myself to sleep last night with the Office of the Deputy Prime Minister (ODPM) report
on the core cities, comparing us against various European cities, particularly German cities which seem
to be very good at innovation and promotion of themselves. They have higher per capita GDPs and so
on. I think one of the winners of that is that the creation of the Regional Development Agencies
(RDAs) is a step in the right direction, but we are still a bit garbled.

If we take the example of casinos, we will all have read in the papers about Blackpool wanting to
quote itself as a casino capital of Northern England, if not Europe. But what seems to have happened
there is that there is a collective vision where the development agency and the borough council and
various business interests have come together and promoted aggressively this strategy. What I am left
wondering, in relation to London, is that there may well be clever people at LFC who are looking at
attracting gambling interest to London, but how do they integrate with the borough interest – a point
that Jennette was making – with the wider strategic objectives of the LDA? So LFC, in investment
strategy, is part of a toolkit, if you like. Taking the example of casinos, I get the sense that the whole
thing is not strung together quite as ruthlessly and effectively as it could be yet.

Rob Lewtas, LDA: That leads me immediately on to the point I was going to make. Obviously we
have looked and learnt from Blackpool. They have taken quite an aggressive stance on this because
they see this as being a real lifeline to service their tourist industry. We would like likewise. Whilst it
is quite early days, we are at quite a formative time now, in terms of influencing the legislation. That
will flavour the type of casino operation, and therefore the type of casino operator that would
potentially set up. That could be a domestic investor or an overseas investor. What we are trying to
do is make sure that this marries very well with the course of strategy. There are two distinct courses
                         Economic and Social Development Committee 10.2.04
that this could go down. It is all down to how many slot machines are allowed in the ratio compared
to how many tables there are in the square footage of the premises. That is all really in the pot at the
moment. It is to come out of the legislation. That will influence exactly who the potential investors
are, depending on what rate of return on their investment they can actually gain. The large casino
operators – and these are the guys who are on the Vegas Strip, the biggest players on the globe – are
actively pursuing some sites on condition that the legislation lends in favour of their particular
objectives. What we would like to encourage…

We will comment on the legislation. We have spoken to John Ross (Policy Director to the Mayor)
about this as well. Anything that comes out of that is in favour of what we want actually want to
achieve. What we would like to do is encourage the larger resort type of casinos so that it satisfies a
number of economic objectives in that immediate locale. These would be family-based with that
would have a multi-dimensional impact on tourism, leisure, and a broad spread of the spectre of

John Biggs (AM): That sounds fine, but my understanding is that the sands are moving quite quickly
regarding gambling legislation. London, if it is going to benefit from this, we need to strike quickly
and ruthlessly. We need to identify sites, get the borough signed up and so on. Has that happened

Rob Lewtas, LDA: No it has not. It has not because until we have actually established what is
effectively a master plan – and that would be a master plan that would include specific sites – if we
could identify zones for potential investment, the first one off the block really is Earls Court Olympia
where MGM Mirage already has an option on that particularl site. You drop a casino of that size into
a locale and it has some pretty considerable impact: transport-wise, security-wise, public environment
and so on ….

John Biggs (AM): And obviously in a relatively wealthy part of London.

Rob Lewtas, LDA: Yes. But that is not to say that other interests are not being pursued in places
like Greenwich Peninsular.

John Biggs (AM): Aman Dalvi – who obviously I know from East London – tells us that casinos
might not be appropriate for East London. But if we cast our minds back to the beginning of the
London Authority and the announcement that they would stop manufacturing on this site, the LDA
now owns 400-500 acres in the proximity of the Ford Motor Company. What inward investment
activity has there been there and what successes can we point to on the ground where we have
actually pulled together clusters of high-tech companies, for example? And if we have not, what have
been the obstacles?

Aman Dalvi, Gateway to London: I cannot state that there have been any high-tech companies.
The Centre for Engineering and Manufacturing Excellence has only just recently come into being. Of
course you have the diesel plant which Ford has retained. By and large, those are the only two
high-tech industries that I can point to. That said, we have been working on a number of inquiries. I
elucidate on just two of them. One is a manufacturing dairy, producing milk products, yoghurts,
juices and cheeses. This will create 220 jobs. We had some difficultly persuading the LDA that this is
an organisation that should fit onto the Beam Reach site. It took some time to get that to happen,
but it has happened. The other organisation we are working with is a print company. They are an
organisation that prints posters for the film industry, posters that appear on the roads. They also
apparently print bank statements directly from the banks on their site which then go out to people
like you and I.

Those are two examples of organisations that we are working with. There are many others as well.
Some of these sites will also prove to be relocation sites as a result of displacement from the work that
                        Economic and Social Development Committee 10.2.04
is being carried out with regard to the Olympics. What I should conclude in saying is that all the
organisations that we are working with, in terms of placing them in sites in Barking and Dagenham
and elsewhere, are either London-based companies or UK-based companies, rather than overseas
companies. In many instances, it is an expansion of an existing facility, rather than new investment.

John Biggs (AM): I should declare, by the way, that I am a Director of the Centre for Engineering
and Manufacturing Excellence. Would the expansion of existing employers in the area count as
inward investment, when that was a UK-domiciled employer historically based in the area?

Aman Dalvi, Chief Executive, Gateway to London: No I do not think it would.

Rob Lewtas, Business Retention Manager, LDA: Not for foreign direct investment. We would not
measure that as being an output.

John Biggs (AM): So with inward investment you are strictly talking about Foreign Direct Investment

Aman Dalvi, Chief Executive, Gateway to London: I am not sure that I would agree with that.
The manufacturing dairy that we have is a brand new dairy where the organisation that wants to build
it is a distributor of milk, but not a producer of milk. So this organisation will carry on with this
distribution, but whereas the milk was produced by others, it is now producing milk in its own right. I
would argue that that is new investment.

John Biggs (AM): We obviously have to make sure that we do not have perverse incentives. I
understand that about half the milk in this country comes from France. If the plant is based on the
output of cows from France it would count as FDI,I suppose and if it was cows in Essex it wouldn’t. It
does not seem to be quite right, does it?

Mike Tuffrey, Chair: Can I pursue where John started, which is about the ruthless strategy? Is there
a ruthless strategy? I am still not clear in my mind whether… Well, put it the other way round. What
could we do better? I hear there is lots of activity and good relations now between the LFC at
London-wide levels down to sub-regional circles. I am still not sensing what are the problems, what
are the challenges, really. What is really going to take us forward? Robert, I do not know if you have
a perspective to add as to where the cutting edge on this is?

Robert Rothenburg, London First Centre Board Member: The first thing if I could add is just
touching on the point that you raised earlier about meeting the London Economic Plan, and the
integration of that together with the private sector’s involvement with LFC. The private sector has
become, because of that involvement, much more aware of what the Economic Plan is. They are
working with LFC on particular initiatives that they are taking, but the priorities of the Economic Plan
are, in respect of whatever it may be, in a particular area. Therefore they are able to actually help with
that and understand better how those objectives can be met, and match the requirements of the

Turning back to where we were talking about the initiative in terms of gaming, and the party that
went initially to Las Vegas and met with the operators there. The individual constituents of that party
– the private sector constituents – were those who were involved particularly in understanding and
knowing about gaming and the legislation and the financial requirements here. They were therefore
able to match that together with what the initiatives and requirements of the Economic Plan. From
that point of view, the bringing together has also enabled the private sector to be involved in
developing that. Clearly looking at it from our firm’s own personal experiences, in terms of support
hopefully for the gaming industry and the various acts that have gone on at the smaller lever on the
support businesses, that will need to come in and support those initiatives as well. And we will
develop that.
                        Economic and Social Development Committee 10.2.04
In terms of particularly looking at it from trying to pull it together, and the challenges that are there, it
is difficult for everybody to know how FDI requirements are moving and seeing where the
opportunities are. Inevitably that means that there is a constantly moving field, in terms of what is
required. One of the aspects that is inevitable is that it is therefore difficult to adjust what are the
objectives of London in its wider sense, and match that with the objectives of the potential investors.
Also to try to ensure that one can marry the two together to achieve the investments in the right area
for the benefit of both the investor and London. That is a constant battle. You say, what are the
challenges and where can we improve? Well that will continue to be a requirement.

Mike Tuffrey, Chair: Looking at other cities, even in the UK, such as Birmingham versus New York,
is there a model where we ought to be at, in terms of moving things forward? Can you cite another
example where if only we were…?

Robert Rothenburg, London First Centre Board Member: By hearsay – and of course that is not
anything to go by – but London is pretty near the top of where, comparatively, the respected
agencies are. But there is plenty of room for improvement. The initiatives that have been taken in
the development of the LFC, through the early 1990s and then on through the boom period of the US
technology investment through the late 1990s, meant that London was ahead of other European
capital cities, in terms of bringing together both the public sector and the private sector. That is
something which others have used as an example and have said, how can we learn from London? And
many have learnt from what we have done in London and have improved their method of operation.
What we need to do, as a challenge for London, is to stay ahead of the game.

David Main, South London Business: I would like to pick up on the relationship to the private
sector. I think we are quite good at a pan-London strategic level. I think LFC has done a good job at
working with the Mayor and various agents. When you get down to a borough level, it is extremely
variable. Quite frankly, in many boroughs, the private sector has a great deal of difficulty getting its
deals across. To be fair to the public sector, they say, well we keep asking the private sector, but it is
not terribly good at articulating and gathering its views. That is where the sub-regional partnerships
and Chamber of Commerce and other bodies at the sub-regional level need to get stronger. Not so
that we get dug in on a public/private sector debate, although no doubt that will happen. But we will
get a more informed debate and the sort of advice that Bob (Rothenburg) is giving us here – from
somebody who deals day to day with companies investing or trying to stay in London. I hope that the
LDA, in its new arrangements with sub-regional partnerships which it announced in its strategic plan,
will help to strengthen the private sector voice locally.

I wanted to come onto the point about getting our act together to a strategic level in London. I think
we have a way to go still on that. I think regional government, regional administration, is still
developing. It is still in its infancy. This is the first of the English regions – if it is right London a
region, it is certainly not right to call Scotland a region – but it is the only one with an elected mayor
and an elected assembly. The other ones are coming up fast. Some of them up north are talking
about that and voting on it. I think it is still developing. But it does seem odd to me that you have
the Spatial Development Plan, the Mayor’s Plan, and then you follow that with an Economic Plan.

At central government level – which I know a little bit better than local government level – you would
start with the Economic Plan of what you want to do with the country, and then you put the roads in
afterwards. You do not do the spatial bit and then say, where are we going? I know I am being a bit
extreme to make my point, but because spatial planning is statutory, it gets done in the cycle. The
economic planning is almost voluntary and comes after it. I think there needs to be a better
coordination, but that is just part of the development of regional government administration. I think
that will happen better, perhaps in the next cycle. I think there is room for more of a coming together
and a shared understanding of where we are going in London, and making sure that all the agencies
are fitting in underneath that.
                         Economic and Social Development Committee 10.2.04
Mike Tuffrey, Chair: On that point, another piece of work we are doing with the Committee is
actually looking at the role of the private sector, in terms of engaging in this bigger picture of
economic and social development, and the environmental development of London, and how it
interfaces with the economic strategy, the spatial plan and the other strategies. Your point is well
made, but it takes us further beyond today’s agenda.

We are still at the level of the general trends. I think we will move on now to some of our more
specific questions. John, would you like to pick up on the business retention support area of

John Biggs (AM): I am not too sure to what extent this is a structural question, and to what extent it
is a question about your internal priorities. I would like to understand better how you balance your
workload between retention, including the innovation of existing businesses and the attraction of new
employment to London.

Rob Lewtas, LDA: If we go back a stage, LFC had some capacity for business retention in years
gone by, prior to the advent of the LDA. It is fair to say that it was quite out of focus. The roll out
across the sub-regional dimension was perhaps in need of some further review of resourcing. There
were some quite significant successes, leading up to 2003.

Andrew Cooke, London First Centre: Yes. In the period 2000-2003, 15% of the projects and 45%
of jobs actually came from business retention, with a fairly small amount of resource allocated to that.
The LDA then took a strategic review of inward investment and the outcome of that was that there
was a need for small resource on business retention, right across the piece, from an FDI point of view
and indigenous companies. Therefore the decision was taken to split the two. The LDA took the lead
in terms of business retention and LFC, going forward, took the responsibility for the promotion of
London for new FDI investment. We no longer have the responsibility for business retention.

John Biggs (AM): Is that a coherent split?

Rob Lewtas, LDA: The review was undertaken for a number of reasons. There were two primary
recommendations that came out of it. One was to look at the arrangements, in terms of the inward
investment delivery service/system. The outcome of that was to tender the contract. Before the
RDAs there were RDOs, which were Regional Development Organisations, who would draw down
funding from the Department of Trade and Industry (DTI), back then which was the invest in Britain
Bureau. You had to have an RDO in order to draw that fund down. LFC were quite unique in that
because they had quite a substantial contribution from the private sector as well. That was the
incumbent service provider at that time. Without sounding too harsh, it was a contract situation that
we had.

With the arrival of the single programme, those funds direct from DTI were diverted through the single
programme budget of the LDA, as it was across all the other RDAs. Most of the RDAs subsumed the
RDO into the operating environment of the RDA. They effectively became an in-house team. The
LDA opted not to do that because it may affect the continuity of service and it may disrupt the
private sector contribution. The idea was to tender it to each other. It was being as effectively
delivered as we wanted it to be and we were getting value for money. That was the first
recommendation. We went through the Official Journal of the European Communities (OJEC) process
to tender that contract. The result of that LFC was the preferred supplier and a contract was awarded
in 2003 to last until 2006.

The other recommendation coming out of the work was that business retention needed to be tackled,
given the fact that FDI was very important, but there is no point in attracting new guys through the
front door is you are haemorrhaging the existing investors through the back door. The
                        Economic and Social Development Committee 10.2.04
recommendation was to apply additional resource in a more systematic way, in a programme that
would have a pan-London coverage. That resulted in the establishment of a business retention team
within the LDA.

John Biggs (AM): You did not decide, for example, to OJEC that, and put that out to another
organisation, eg the LCCI, a business retention service?

Rob Lewtas, LDA: It is a possibility, but given the need to link with those organisations, it needed
something at the hub to operate the spokes.

John Biggs (AM): I suppose I am trying to understand the coherence of outsource on one part and
not the other, particularly in so far as it impedes linkages between them. I am getting obsessed with
Aman’s diary for example. I have in my mind that you have a dairy based somewhere else in East
London which relocates to the Thames Gateway, maybe consolidates, gets new a new plant in. The
second option would be that the dairy was already there, it innovates and gets investment to do a new
bioengineering product. The third option is that you have an American dairy corporation which
invests in the Thames Gateway. They may not be exactly the same factory, but one of them comes
through you, and one of them is innovation. I am not too sure…

Rob Lewtas, LDA: I will try and tie this up. We do outsource some of the services, and we
outsource it through the sub-regional partners. Recognising that we have to have local knowledge,
local intervention, we do outsource some of that, but there is a very small in-house team which really
acts as an interface between national government and pan-regional London activities, to make sure
that there are sensible, methodical and systematic processes in place. Therefore, if somebody in west
London wants to invest in east London, then there is some way of actually brokering it.

The simple principle is a commercial one where, in a lot of sales operations, you have hunters and
farmers. The hunters go out there and attract the new investment, the farmers make sure that the
harvest is actually there. It is trying to apply those principles. It is also recognising that London has a
very different demographic. If you look at the demographic of the business base in town, it is very
different to that of the other regions. You do not have the normal pyramid structure. It is actually a
keyhole structure. As you get to the very large corporates we have quite a lot of those within the
confines of the city and of Greater London. We have to take that into account as well. Many of these
organisations have a multi-regional presence, not only within the Greater London area. We have
across a number of projects where they actually scrabble the boundaries. There needs to be
somebody to coordinate, referee, facilitate – whatever the term is – within the LDA to make sure that
those accounts are being managed well.

David Main, South London Business: First of all, 30% of London’s farmland is in the Borough of
Bromley. A useful statistic for you! Is it a coherent split between business retention and inward
investment? Well whether it is or it is not at the pan-London level, I do not think it matters too much
because actually nearly all the work of business retention is done at a sub-regional level. I can assure
you that at the sub-regional level there is no distinction between inward investment and business
retention. In fact, very often it is the same people who are actually mixed from one to the other.

I do not really care whether it is FDI, it has come from Essex, or Newcastle, or it is there and it is
threatening to go or it needs a new site or whatever. It is a company in South London or potentially
South London that needs our support and assistance. We really do not discriminate between the two.
Clearly, in an area like South London – and this is different for Aman (Dalvi) – business retention is
much more important than FDI. There is an old adage in business: it is far easier, or more cost
effective, to retain your existing customers and your existing businesses than to continually go out
and get new ones and have a big churn. So we spend more resources on business retention,
systematically going out to the key businesses in South London, finding out the issues and trying to
resolve these.
                         Economic and Social Development Committee 10.2.04
Aman Dalvi, Chief Executive, Gateway to London: Obviously because of the amount of land
available, and the priority that is placed upon it by government, inward investment is very important.
But equally, one has to make sure that the jobs that you have got in the Gateway are safeguarded. If
companies are going to leave the Thames Gateway, the how can you project the area as a place for
inward investment when existing companies are leaving. I tend to think that should take an equal
priority, and the split between inward investment and business retention is around 60% to 40%.

One example I wanted to highlight was that in the first year of our existence we only had one
employee who was, incidentally, supported by LFC, to cover business retention. We were not really
able to do an effective job because this person had to cover almost 12 boroughs. But now there is
now funding from the LDA to employ three people. I am absolutely staggered as to the amount of
work that has been generated by these three people, not only in relation to safeguarding jobs, but
also in assisting companies with further expansion.

There is a direct correlation between the people we have employed and the number of projects we
have been able to generate. Our last set of papers for our board, showed this sudden leap. It was
simply because of the fact that we have been able to put bodies on the ground for the people to talk
to. Even three, who cover 12 boroughs, is nowhere near enough. We have to work with our partners,
that is, the local authorities, and discuss who they visit and who we visit.

John Biggs (AM): How many do you have?

David Main, South London Business: We actually have two full-time equivalents in South London.
But I agree entirely with the Aman (Dalvi), as you would expect me to on that point. We can do with
many more. 20% of the visits that we undertake result in an issue which needs to be followed up.
Sometimes it is quite small, but sometimes it is exceptionally big. A company says, we are going to
move out of this area because we are not allowed to consolidate our premises, or we have issues with
crime, or whatever it is. Obviously these issues take quite a long time to resolve. We start off
bouncing out to visit businesses, then you get more and more issues, and they back up and you are
still visiting other companies.

It becomes really quite an expensive operation. But it is amazing what you find out there. These
companies would not have come forward. They kind of laud a bit to their local councillor. Sometimes,
depending on who their local councillor is, it is taken up or it is not taken up. Then, they just go. The
first you read about it is in the newspaper. ‘The XYZ company has left the borough.’ Then you go
back and find out that for years they had been suffering and no-one had been listening. That is a
serious issue we have to tackle.

John Biggs (AM): Obviously we are at risk of getting carried away with this wave of conscience
which says that we are not doing enough to retain existing businesses. But the scrutiny session here
today is to look at inward investment and our strategy for that. I guess the point has come out quite
clearly that there is this very blurry interface between the two sides of it: retention and inward
investment. They are very much part of the same animal. I guess there is a question about the
cocktail of services available to people – and this is partly not of our making – whether it is the skills,
agenda, the DTI Small Business Service, sub-regional partnerships, and business links to London. It is
about pulling all this together. Do you feel that that presents a coherent face in the borough? Let us
say that a rich Texan gets off at Heathrow Airport, turns up at the Thames Gateway and wants to
open something. If he finds he has to have 1,200 meetings with 17 different people in order to do
that, are we incoherent in that regard?

Andrew Cooke, London First Centre: In that respect, we are trying to sweep the path. Just going
back to that business retention point just for a second, it is an artificial split. You are right there. But
we are trying to be as pragmatic as possible, in terms of the clients’ needs. You are right in terms of it
                         Economic and Social Development Committee 10.2.04
being slightly murky, but we are trying to make sure that we are keeping the clients’ requirements at
the forefront. Our role is very much to imbed new companies into London, particularly those
companies that are starting off very small – they are initially going into temporary space quite often,
into a serviced office – to make sure that they are in imbedded and move into permanent space. Also,
to make sure that they get the support services, that we think we are best able to offer in conjunction
with our sub-regional partners.

Then once we are sure that they pretty well imbedded, they have a new set of requirements which
may relate to expansion and planning issues, etc, then it makes sense for the LDA to take that on.
Therefore we are quite pragmatic in terms of how that works. Where there are Japanese companies
involved, who like continuity of client management, we agree with the LDA that we will maintain
those relationships. Given that business retention is a big source of new investment as well, in terms
of the supply chain, etc. The two are extremely closely related. We need to make sure that that

In terms of there being a myriad range of support services, yes it can be a minefield for the companies
coming into London. That is why they find our service particularly helpful in terms of there being a
single point of contact who can guide them through that, both at a pan-London and then at a local
level as well. We are trying to plug them into services that they need, both from the private and the
public sector. Typically they will have requirements in terms of finding property, needing an
accountant, a lawyer, recruiting staff. But then there may be other services that they need in terms of
skills development, or developing their export potential into Europe, given that many are using
London as a springboard into the rest of Europe. Therefore, we will plug them into UK trade and
investment export services. Yes, there are a myriad of services, and they are not necessarily all clearly
badged, but ensuring there are effective signposts is one way that we can guide them through.

John Biggs (AM): I will stop in a second, but just to follow that point through, I assume that our
competitors, as far as inward investment is concerned, in pan-European cities. The grass is always
greener on the other side of the fence, but you hear these stories of there being a one-stop shop
approach in Catalonia or somewhere, which is a lot better and more streamlined than in London.
Obviously there are all sorts of subsidies and European funding issues which tend to push people one
way rather than another. However, all other things being equal, do you feel that London is
disadvantaged at this stage? Also, are we doing enough to pull together those strands so that we do
not turn away investment with being simply boring, confusing and frustrating?

Andrew Cooke, London First Centre: No. I do not thing that is a disincentives. We have not
uncovered any evidence to suggest that people are turned off one bit.

John Biggs (AM): How would you test whether that was the case or not?

Rob Lewtas, LDA: That is a good point. We do not know if this is going on because if someone gets
so frustrated then we will not see them anyway. If they do not come through that door of the
one-stop shop, then we have missed them. I think if we look at our competitors overseas, and
certainly in the way of New York, they have a very, very well-oiled, well-established system where
they have a portal. If you are Joe Visitor, or Joe Tourist, or Joe Businessperson, whoever, you have
very clear entry points. The signposting thereafter is very straightforward.

The Mayor is looking at this quite actively: having a wide London portal for any potential incoming
visitor, investor, student, and so on. Then you will have some very clearly defined signposting,
because it is confusing. At the moment it is quite loose, the referral and signposting we have in place.
But when we have the inner team of players, in terms of the sub-regional partners, LFC, the
Confederation of British Industry (CBI), the London Chamber of Commerce (LCC), and so on, they are
quite au fait with who the various players are. They know if they receive these players, they know

                        Economic and Social Development Committee 10.2.04
who to pass them onto. Therefore, once that lands in the right hands, we can track it and deliver it
accordingly, but there are holes in the net.

John Biggs (AM): Is there anyone from the coal face who can contradict that?

David Main, South London Business: I would not like to contradict it at all. In fact, I would be
even more positive. If somebody has identified a potential site in South London for their business and
wants to come to South London, we will take them right through, to even finding them a suitable golf
club. That is what you have to do for a potential inward investor. The only one point of reference is
the South London Business. We can help with the skills. We get one million hits on our property
database every year. There is a whole range of services that we provide. I am obviously banging the
sub-regional partnership drum, but that is the advantage of using the sub-regional partnerships,
because you can bring the LFC, the LDA, the Business Link, and the DTI Small Business Service, all the
services together at a delivery point. It may be that the policies are decided slightly separately –
although I would hope that they would all join up – but it is at the delivery end that you need to get
coordination. I am very confident that London operates a good service. I cannot compare it with
Catalonia, but I am willing to go out and find out!

Jennette Arnold (AM): In terms of comparing, I do not really know why we are comparing ourselves
with other cities which have totally different cultures and structures in terms of the business support
and the way that businesses themselves operate. I would like us to spend much more time looking at
the LDA, looking out how they can coordinate more together here in the city. I love David’s (Main)
optimism. It is lovely to hear south London business is going so well. However, can you say that that
is the same across Greater London? If we start talking about Greater London, I think we would find a
totally different picture. Then if we went into other parts of Greater London, I am sure that that
would not be the experience of South London. Really, why has it taken the LDA so long to actually
look at the relationship between the offer and the landing. We still have that issue to deal with.

Rob Lewtas, LDA: Just in response to that, in this particular session inward investment is the topic.
We can explore all sorts of different issues, weaknesses and problems within the wider London
business support network. I cannot address each of those. If I could it would probably take to the
end of the week.

Just to explain some of the complexities of this. The first step we took into this was about a year to a
year and a half ago when we helped set up the London Business Support Network, which was the first
step in trying to wrap up some of these. There is something like 260 separate business support
organisations ranging from Business Link to Learning Skills Council. With all of them, there is a local
element on the ground. It is confusing, but that was an attempt in some ways, to try and encapsulate
all of this into one superstore of business support organisation with clear identification of what they
do for a living and how to contact them. Then to establish some sort of standardisation of service, or
a kite-mark of service, so that if they are going to be part of the network they are going to have to
pass a certain standard.

From the inward investment point of view, it is quite a pretty picture. Each knows what the other
party does. That ranges not only on the ground and talking to a borough about a very local issue –
whether it is a local environmental issue or a transport issue – right the way through to the DTI’s
scheme which still represents something like 60% of the source of FDI coming through that particular
channel, through central government, through their overseas network of consulates and embassies
and business outfits. There is a relatively well-oiled machine that kicks in when an investor says: I am
interested in investing in the UK. I think we can be quite comfortable with that.

As far as the wider business support network is concerned, there is a big job of work to be done. I am
not sure that this is the right forum in which to discuss that, because it involves different assets of the
LDA, linked with Business Link and the other business support network. That may well be another
                         Economic and Social Development Committee 10.2.04
Committee item or an agenda item. I do not want to side-step the question, but I sympathise exactly
with what you are saying.

Jennette Arnold (AM): I am saying that one of the difficulties of only looking at one piece of the
jigsaw is that we could leave here saying that it is a rosy picture. However, when you put that in
relation to other things that are happening, and this whole concept of Greater London, then I am
saying there is still a lot of work to do. I go back to my question: I think one of the things we want to
get out of this meeting, for me, is to understand primarily what more can the Mayor’s economics’
strategy do? What more can the LDA do? What else do we need to do, in terms of looking at
coordination, support, and what have you? This is where I am not getting that feel at all. It is just
people saying that their little bit is okay. That is fine, but that is not the Greater London picture of
inward investment.

Robert Rothenburg, London First Centre Board Member: Can I just add something to that
point? Looking at it again from perhaps a user’s point of view, when a business arrives in London and
plugs in somewhere to some contact across the whole network, they are pretty quickly plugged in to
the other aspects of the network that they particularly need. Be it that they are coming in through an
introduction into the private sector, be it that they first hear about LFC through UK Trade and
Investment, be it that they pick up from a local Chamber of Commerce, they pretty quickly get hooked
together with the aspects of the services that they need, from whichever agency it is, to help them
develop. Of course those are the ones that we know about. The ones who have got away because we
do not know about them, it is difficult to analyse where those failures are.

I have to say, I cannot remember where this information comes from, I think it was one of the Ernst &
Young inquiries into inward investment into Europe. It was analysing why people did not come to
London. The principle reason there was cost. Then came transport, and then there was an issue on
policing or crime.

Darren Johnson (AM): I have a question for David (Main). In your written submission, you talked
about the re-branding of the London First Centres as a way of helping you improve business support
services. How do you envisage that re-branding?

David Main, South London Business: I think LFC needs to respond to the competition, that we
have heard described earlier, from other European capitals and European primary cities. I think it has
to be a bit more upfront than it has been. It is not really that the LFC has to be more upfront.
London has to be more upfront in seeking to attract a bigger share of the FDI market. Barcelona is a
good example of a city that is coming up fast. Is it third now? Is it London, Paris then Barcelona?

Andrew Cooke, London First Centre: I think Frankfurt is just third.

David Main, South London Business: But it is coming up fast there. There is new competition. As
John (Biggs) was saying earlier, sometimes they can slip you a few bob as well to help encourage you.
However, that is not necessarily a crucial factor for some companies, particularly companies that come
to the city here.

They need to be more upfront, more assertive, even aggressive, in our branding of London as a city to
be in. We need to work in a team London approach. It is not just the LFC. We have Visit London, we
have many different London agencies. We should all be pulling together on something that we all
agree with.

On a small point, the name London First Centre: I do not know how it got that, but certainly it is an
astonishing bit of branding. If you are going out to a marketing, in terms of ‘London First Centre’ it
really needs to be something a bit more punchy which actually says what it is, rather than describing

                        Economic and Social Development Committee 10.2.04
an organisation. Also, LFC has to come out of the backstreets of Hobhouse Court. It needs to be
much more upfront.

I believe it should be in with Visit London. The two organisations are very close together. One is
selling London to visitors, the other is selling London to companies abroad. I think it should be
somewhere like at the top floor of that building next door, proclaiming London as the place to come
to from the 10th floor of the second Ernst & Young building there, or something like that. We should
be much more upfront and proud of the fact that we are selling London.

Jennette Arnold (AM): How do you fancy that move?

Andrew Cooke, London First Centre: I cannot afford the rent! This is something that we are
certainly considering. It is something that the LDA asked us to consider, in terms of when we won the
contract, in terms of looking at a new name and identity for LFC. We have done that. In fact, we
have done a much more wholesale review of our strategy. We have done a huge amount of
consultation with stakeholders in terms of investors, our funding partners, the private sector and the
public sector, and sub-regional partners. The consensus was that there is a certain amount of
confusion between London First and London First Centre, in terms of the names. Therefore, to do
something about that would be helpful.

Also, there is a real imperative now to be as proactive as David (Main) was saying in terms of
marketing London, given the greater competition that there is and the negative noise that there is
around London, as well as some of the opportunities that exist, particularly in terms of options within
Thames Gateway and the Olympics bid. We really need to capitalise on those.

Initiatives like the LDA’s Team London have been a major step forward, in terms of all the promotional
agencies working together under a collective banner and with a consistent brand which they can all
fall within. We certainly want to make sure that we play our part in that, but also that we refresh our
messages that we take to the marketplace. This is something that we have not really done since we
were first set up 10 years ago. It is time to have a wholesale review of those messages and how we
get those messages across.

There is consensus that London is under-marketed, given its position as one of the free world’s
greater cities. We need to work hard to maintain its position and build on its position. That is the
rationale behind this whole re-branding: to make sure we have a much more proactive marketing
initiative out in the field so we can reach the investor at the earliest stage of the process.

Darren Johnson (AM): You talked about the problems with the North West Development Agency’s
campaign. Is not competition between regions inevitable?

Andrew Cooke, London First Centre: Yes, I think it is, and in many incidences it is quite healthy.
However, we take exception when it is to the detriment or to the knocking of other regions, which the
North West Development Agency’s campaign was. There were full-page adverts in the Financial
Times (FT) denigrating London. That does not do the UK, as a whole, any favours in terms of an
international audience, given London’s position as brand leader in many instances from an inward
investment perspective. We think that it is a waste of public funding to be developing campaigns
where you are moving jobs from one part of the country to another. Yes it is healthy and there is a
great deal of rivalry between the various agencies around the UK, and UK Trade and Investment do
their best to coordinate those activities.

Darren Johnson (AM): In terms of inward investment overall, how much do you feel that different
development agency activities actually bring in new investment, rather than just pulling it from one
region to another?

                        Economic and Social Development Committee 10.2.04
Rob Lewtas, Business Retention Manager, LDA: All of the RDAs have now shifted the pendulum
from inward investment, which was always the far more newsworthy, high profile type of activity, to
allow the various different organisations or individuals to stand behind fantastic new investment
projects. They now seem to have recognised that the domestic market is as lucrative, in terms of
salvaging or safeguarding companies and more importantly, of poaching businesses across borders.
As long as it is in their location, it is a win.

When the flows of FDI tend to stem or slow down, our colleagues in other regions tend to refocus
their efforts in particular on London. London is more prone to poaching than most other regions in
the UK. In fact, I could almost definitely say that. You can see that in campaigns run by
Peterborough, Milton Keynes, Kent, very regularly in the Evening Standard, and the higher profile
ones in the FT from the North West Development Agency. Through the Committee for Overseas
Promotion, through rough protocols and guidelines, that should limit some of that…

Darren Johnson (AM): How effective is that at the moment, the Committee of Overseas

Rob Lewtas, Business Retention Manager, LDA: It is the only thing that we have. Most of the
other regions are subscribed to it, but that does not necessarily stop some sub-regions, local
authorities, county councils, city councils, and others, going renegade and doing their own thing. We
try to minimise that through the proper arrangements, but that does not necessarily stop it.

Darren Johnson (AM): In dealing with the poachers then, one final question, what are London’s
unique selling points?

Andrew Cooke, London First Centre: One is that it is a huge marketplace in its own right. It then
has access to other markets, both within the UK and to Europe. It has access to the largest labour
force in Europe. If you take London and the South East, it is among the most highly-skilled. It has a
world class education and research. London is probably unique in terms of any city in terms of the
strength and depth in terms of its business clusters: financial services, creative industries,
biotechnology and professional services. What is interesting particularly is when those sectors
intersect, so the relationship between creative industries and design and value-added manufacturing,
for instance, or between ICT and financial services. That is where I think you can develop some
interesting propositions: the diversity of the London product.

It is not just a central London HQ location. You can put your back office in Thames Gateway and your
logistics, distribution, and your R&D centre here as well. That goes for other cities. Lastly, it is quality
of life, both in the cosmopolitan and multi-cultural elements that are very strong features. The
benefits of that remain strong: being able to have a multi-lingual call centre here to be able to carry
out clinical trials on the basis that you have virtually every ethnic group represented in London.

John Biggs (AM): I suppose the big handicap of London is that there is no point in investing here
unless you are able to pay relatively high wages. Barcelona has a percent lower wages on average
than London. I was interested in looking a little more closely at this inter-regional competition issue.
Two examples are represented at this table. One is the link between South London and, say, the
airport and the Gatwick and Crawley area. Another would be the Thames Gateway and how it leads
into Thurrock in Essex, where, as I think someone said, the greater good of the area could be
reasonably well served by locating just outside of the Greater London area, in the South East, and the
artificial boundaries. Do you think we are well coordinated on that basis?

Rob Lewtas, LDA: The cross-regional relationship?

                         Economic and Social Development Committee 10.2.04
John Biggs (AM): Someone for whom London might be too expensive, might be well guided to
invest in Thurrock. A lot of employees may well be Greater London residents who would bleed across
the border and earn their wages.

Andrew Cooke, London First Centre: We are quite pragmatic from that point of view. Obviously
we try to keep investment in London first, but there is quite a close liaison with our neighbouring
agencies, in terms of South East England Development Agency (SEEDA) and East of England
Development Agency (EEDA). Prior to their existence, we did help companies into areas like Slough.
If companies want to be Heathrow, it does not really care which side of the border it is on. There will
be economic benefits to both regions. We will pass on inquires to our neighbouring agencies if it
makes sense to do so. We have carried out joint marketing initiatives with those agencies in the past.

John Biggs (AM): I happen to a Director of a Single Regeneration Budget (SRB) branch of East
London which very uniquely includes as one of its members Thurrock Council, which is outside Greater
London. But that has created some tensions in terms of the funding regimes and it was said that it
might be inappropriate to spending GoL money outside the GoL area. Are there perversities there?

Aman Dalvi, Chief Executive, Gateway to London: Yes! Ostensibly I am meant to cover the whole
of London Thames Gateway, but also Dartford and Thurrock. I have to be very careful in terms of
expenditure. I cannot spend any LDA money in those areas. Equally, I cannot spend any of
“Objective 2” money that we get from the European Union. That creates difficulties for me. But
nevertheless I have responsibilities for those two areas. The way I handle it is exactly in the way that
Andrew (Cooke) highlighted. If a company wishes to relocate in those two areas, with all the
persuasions I may have for them to settle in the Thames Gateway, the London part, then I would make
sure that I consult my colleagues in Dartford and Thurrock to make sure that these organisations are
settled there, and do not leave the Gateway as a whole.

John Biggs (AM): What you say might be a useful conclusion to this session – out of the many
useful conclusions – that better coordination between London and its adjoining regions, where there
is an obvious self-interest must be developed further.

Aman Dalvi, Chief Executive, Gateway to London: Yes.

Mike Tuffrey, Chair: Or the more radical suggestion that in fact trying to organise inward
investment on an RDA boundary basis is going to be problematic, and that inward investment should
be South East.

John Biggs (AM): We do not want to go that far!

Rob Lewtas, LDA: Can I just give a note of reassurance on this? Given the fact that 60% of FDI
projects still come through the auspices of the DTI, and UK Trade and Investment, based on the
clients’ stipulations and specifications and requirements. They may say that they need to be within X
minutes of an international airport, therefore they need a labour catchment that contains XYZ. They
therefore know exactly what their functional requirements are, or logistical requirements, when they
are looking for that relocation site.

The team there on the London desk will shortlist and really propose the most appropriate locations on
that basis. They effectively referee the process. They will strip out those areas that do not fit the bill.
So if they want to be within five minutes of Heathrow, two regions get pitched and the other simply
do not. There is a clear in-house in effect, so that they will actually referee and coordinate the

David Main, South London Business: We have strong links with Gatwick Airport because airports,
as we know, are generators of economic activity. We would be silly that just because it is outside
                         Economic and Social Development Committee 10.2.04
London to forget about Gatwick airport. That Gatwick corridor is actually quite a driver in economic
growth. I know that the LDA has been talking to SEEDA about that. We certainly work closely with
British Airport Authority (BAA) at Gatwick for a supply of labour from some areas of Croydon because
transport links are very good. But also, companies wanting to be within X minutes of an airport could
locate in Croydon or Sutton and have quite quick access. Actually we are quite competitive, because
of supply and demand at the moment, with various places in Sussex.

When we are marketing South London, we do not look at a map of London and have South London as
a segment of it. We look at a map that stretches from Southampton to Dover and up through Central
London. South London sits in the middle of that. I actually have a company at the moment that is
interested in manufacturing in South London. It thinks South London is ideal because it can get to
Southampton for its deliveries and also up to all of Kent. So we look at ourselves from 35,000 feet,
rather than just from a few hundred or a couple of thousand feet.

Jennette Arnold (AM): Just before David (Main) sort of pitches more and gets into Croydon’s bid
for city status, though it sounds like there is a good proposal there! I think we have heard quite a lot
about coordination in what we have discussed so far. I just wanted to ask Aman (Dalvi) to elaborate
on a statement he made earlier. That is the issue about Crossrail and the absence of the transport

Aman Dalvi, Chief Executive, Gateway to London: I think the single most important factor in the
Thames Gateway that is prohibiting inward investment and further expansion of businesses is the fact
that transport infrastructure is so weak. It is not only in relation to Crossrail, or the absence of the
Thames Gateway bridge, but it is in relation to just the absence of transport infrastructure.

A lot of the sites that I am trying to market to inward investors are in places like Barking and
Dagenham, Havering, Thamesmede towns, Greenwich, and Bexley. These are quite remote from
existing transport nodes. Therefore, when you bring an inward investor in, one of the things you have
to demonstrate to that inward investor is how they will get their employees from A to B, and how they
will get their goods from one point in the north to another point in the south in the absence of a
bridge. These are actually quite difficult arguments to make because what an investor will do is they
will plot their journey times using pretty sophisticated computer equipment. They will see that it
takes two hours to get from A to B, and that puts 1p extra on the product that they wish to sell, and
then it is just not economically viable for them to invest in the area. That is on the one hand.

On the other hand, I often argue that inward investment is linked to a number of issues. You need
communities. And for communities you need housing. Of course both of these issues are
predominant in the Thames Gateway. But in order to attract communities, and in order to attract
housing, you need to have good social and physical infrastructures. As far as physical infrastructure I
have mentioned transport, but equally you have got other social infrastructure that needs to come in
such as schools and community centres and recreational facilities.

In effect, inward investment, housing, communities and social and physical infrastructures are not only
inter-linked, but they are inter-dependent. Without one, you are not going to have the other. That is
the biggest difficultly that the Thames Gateway is facing. If we are to attract the kind of investment
that the government, and the kind of investment that the Mayor wishes, into the Thames Gateway,
then there has to be a clear direction on how the transport infrastructure is going to come in.

I just want to end by saying that if you are going to build 100,000 homes – and there are some
pundits who are saying we will have 200,000 homes – you cannot isolate these communities. There
has to be an element of community cohesion as well. That will not work if you do not have the type
of infrastructure that I have talked about in place.

                        Economic and Social Development Committee 10.2.04
Jennette Arnold (AM): Would you say that we have not? What we have heard this morning is that
there is this lack of a strategy that encloses those elements?

Aman Dalvi, Gateway to London: You have to deal with the lack of infrastructure and the direct
correlation in terms not being be able to bring investment in. I can point to empirical evidence, not
anecdotal evidence. There is empirical evidence that shows where it has been difficult to attract an
investor in because of the difficulties that we have at the Gateway.

Mike Tuffrey, Chair: Presumably nobody dissents on that proposition, that transport is crucial,
particularly for the east. We have touched on answers on this question of sub-regional coordination
and competition. Is there anything that anybody would like to say about that, either from a
sub-regional perspective or from a pan-London perspective? Is there a problem with too much
competition and too little coordination within the region? Is there more that needs to be done, or are
you broadly happy from your various perspectives?

Aman Dalvi, Gateway to London: Within regions – and I do not know about the four separate
regions in London – of course we have felt the competition and that is good. But we also make sure
that if a client has set himself on South London then we will refer the client to the South London
bureau of business and say, we must make that that person is secure for London. The way we do face
competition – and I am not sure whether we have done enough – is that if you look at Kent as a
county, they do not market themselves as Kent, they actually call themselves Locate London Kent. It
is exactly the same thing with Ashford. You go to Ashford and they call themselves London Ashford

Jennette Arnold (AM): The same in Luton as well.

Aman Dalvi, Chief Executive, Gateway to London: Yes, London Luton. I am not sure that we
have done enough work to ensure that we compete effectively with all these people who call
themselves London but are not really London.

David Main, South London Business: I agree with Aman. I do not think there is an issue about
competition about the various sub-regions. The key to that is that each sub-region has, over the last
year, been given help from the LDA and the LFC to develop their own offering. It is quite clear what
it has to offer. I know that I cannot offer some of the things that Aman can offer, and he cannot offer
some of the things that I can offer. We match up against companies.

When we sometimes get to the position where a company could go into one or more sub-regions,
then a little bit of healthy competition is good. That is what the potential inward investor loves. He
thinks, great, I have a choice here. That is fine. I do not think that gets out of hand.

There was an issue about local boroughs. I think at that level that there is not enough competition,
among the local boroughs, to get the inward investment. I think we could do a bit more to insight
boroughs to be more keen on that. But the point even there is wider. It is not that they do not want
inward investment, it is that they do not really understand the needs of business. We need to get
underneath that. It is about business retention and inward investment for a number of boroughs.
They need to get closer to business.

When you confront a borough that says, I do not want inward investment. You can then say, well if
we offered you, let us say, a very high-tech headquarters building, a beautiful building somewhere on
a Brownfield site that you have, not using any car park spaces, etc, and everybody is going to get
£150,000 a year, and we will only employ local people, then they would say, that would be a great
idea! You have to get the maths right for the area.

                        Economic and Social Development Committee 10.2.04
John Biggs (AM): I do not want to delay the meeting, but that does remind me of something. Your
comment feeds very neatly into another one which is about one of Mrs Thatcher’s great
nationalisations, which was of the business rates. It struck me for some time now that one of the
consequences of divorcing the local authorities self-interests from the revenues generated by
businesses is that in London for example, apparently local authority seem to arguably have an
over-attention to producing land for house building and possibly an under-attention to retaining land
for employment. That is rather simplistic as we perhaps do not need quite as much land as we used
to, but aligning the self-interests of boroughs in job creation is something that is clearly missing at the

I know we have mentioned the selling points of London, but we have not said much about the
linkages of higher education and universities to the inward investor. I know on a macro level, we can
talk about Imperial College and all the clever stuff they do there and how it attracts people, but on
the ground in the Thames Gateway or South London where you perhaps do not have prestigious
universities right on your doorstep, but is there a sufficient linkage between universities and
innovation and inward investment in those areas?

Mike Tuffrey, Chair: Are there any other topics or questions that we should have asked or addressed
this morning?

Rob Lewtas, LDA: There are probably three points there. The first one is about the engagement of
the local authorities. It is an issue. We have been evangelising about the merits of business retention
at a series of roadshows to local authorities, saying, this is what it really means. The take-up has been
quite light. This is either because of a lack of political appetite or other resources. I think it is safe to
say that in many instances, the only involvement that boroughs have, in terms of business retention, is
that they do not have an appetite for inward investment. It is effectively ambulance-chasing when
companies have announced their closure or relocation. That is when it becomes a potential political
hot potato. Then suddenly they ask, what are we going to do about it?

The fact is that once the announcement has been made, it is virtually impossible to reverse that
decision. The instances where those decisions have been reversed are very few and far between. We
would be inclined to extol the virtues of engaging in this programme through the sub-regional
partners, but take-up has been sporadic.

The second point, about how we are working with the sub-regional partners in terms of coordination
and competitiveness, I will await comments from colleagues. We have tried to assist and facilitate
from the core in some areas by providing central resources in terms of account management,
allocation, database provisioning, intelligence systems provision, and also some training. We are
trying to build that network so that it is a much more cohesive network, ensuring that the channels
are open to communication, bearing in mind that a lot of the companies that we handle have a multi-
regional dimension to them and presence across one or more sub-regional partner boundaries.
Because of London being the headquarters, we often have a national dimension to this. We do have
quite an entrusted role to play in that.

I will welcome comments and critiques from colleagues about how effective that has been. But I think
that training is something that we have well received. We have had four series of two or four-day
training with things like basic account management, processes and methodology, how to tackle
accounts and identify and segment markets. All of the usual sensible housekeeping will hopefully
upgrade the level of service that we provide.

On the last point, about how we present the offer to the marketplace, there is a very keen interest in
developing this proposition marketing, depending on what the company wants. If they are interested
in Further Education (FE) or Higher Education (HE), or if they are interested in supply or telecoms or
infrastructure, we can mold the propositions to suit their particular needs, rather than to just have a
                         Economic and Social Development Committee 10.2.04
standard brochure that you package and dispatch off the shelves. There is a keen eye on how we
develop the proposition on a needs basis to each and every client, with a keen eye on who the client is
and what their specific needs are.

Aman Dalvi, Gateway to London: I have a final remark, but I do not want to add too much to what
Rob (Rothenburg) was saying. My final remarks really address the questions about what we need to
do to improve the offer in London. I would like to make three suggestions. Firstly, some of the
sub-regions, but not all of the sub-regions are able to offer their potential investors up to 50% in the
form of a grant which the LDA administers. However it would appear to me that the boundaries and
given by the DTI do not seem to have any rhyme or reason behind them. You will have extremely
deprived sites, based in Havering and elsewhere, which are not included in the Regional Selective
Assistance area. Equally you will see some areas that are included which perhaps should have no right
to be there. One cannot underestimate the carrot, the bait, that the Regional Selective Assistance
grant has to potential investors. I would recommend that the boundaries need to be looked at.

The same thing applies to Stamp Duty as well. I have sites that are about 100 yards outside a Stamp
Duty area. Again there is no rhyme or reason as to why they are not included. I think that Canary
Wharf is excluded in relation to Stamp Duty, and it is one of the richest areas there is. Again, why
should Jeffreys Road in Enfield be outside the Stamp Duty area? That has cost one of my clients
£150,000. That £150,000 does make a difference. I think that needs looking at.

Finally, it is the issue of planning. In London planning is almost impossible. If you have a complex
site, you have the local authority, you may have the LDA, you have the GLA, you have the Board of
London authority. I have one site, which John (Biggs) knows about because I have been talking to
him as my constituency member, which has been in the backwaters for five years because it cannot
get anything done. That is an isolated example, but it can take as long as two or three years to get
planning through. No wonder manufacturing customers would rather go to the east of Europe. Not
only is it cheaper to develop there, but planning is overnight.

Andrew Cooke, London First Centre: In terms of the points about higher education and London’s
research base, that is a huge strength which we are seeking to capitalise on. We are working
particularly closely with the London Technology Network. They are mapping where London’s areas of
expertise are. We are developing propositions around particular sections to tie in with that. That is
beginning to bear fruit.

In terms of other closing remarks, from our perspective, we are looking for greater collaboration with
other promotional agencies, and developing this Team London initiative further. We are keen to work
much more closely particularly with Visit London, and to explore the close relationship between
business visitors and inward investment. I think there is a lot more work that could be done there, and
certainly supporting the move for a convention centre in London as a catalyst for inward investment.
We also want to see how we can develop the Olympics as another catalyst to investment.

We touched on the murky area of the inter-linkages between inward investment and business
retention. It is critical that we do make sure that those mechanisms are as effective as they can be
and as clear to the client as they can be. I think there is more work that we can do there.

Finally, I want to make sure that our strategy is as tied in as closely as possible with the LDA’s
initiatives that they are developing, particularly around the sectors and their innovation strategy so
that we are really getting leverage from initiatives like Creative London and the production of the
Industries Commission. We are developing joined-up promotion strategies and developing the
economic strategies.

Robert Rothenburg, London First Centre Board Member: I think really my only comment is to
ensure that one does not lose sight of the influence of the private sector in all of this, and that most
                         Economic and Social Development Committee 10.2.04
of inward investment will be looked at initially by the private sector businesses often before there is
any involvement by any agency at all. Also, to ensure that those businesses who are engaged in the
inward investment FDI market are actively encouraged to participate in all of the various public sector
initiatives and that it is as joined-up as possible so that those who are working in the private sector
can actually understand where is the right place to bring in – and who to bring in – to that process of
trying to land the investments for London.

John Biggs (AM): I agree with Aman (Dalvi) on his point. I think it is a very special site concerning a
protective wharf. It is one of the very few issues where I am directly opposed to the Mayor’s view.

Jennette Arnold (AM): Chair, I welcome this session. Aman talked about the issues to do with local
government, and I think that there is lots more work to be done and I look forward to seeing how the
LDA’s strategy, in terms of sub-regional partnerships, helps that. I have to say – and John (Biggs)
raised the point – that that has not always been the case, that local government did have the resource
and the link and was the driving force behind business. That is what we have to remember: it was a
policy decision that brought us to where we are today. There is no reason why we cannot look to see
how we can all work together, irrespective of any political positions we hold. When we are talking
about London and the whole of London there are absolutely some key issues about local government.
There are issues about how we need to look to the government towards Europe and see how we can
get greater coordination. I thank Aman for putting together all those elements that we need to
actually get the offer landed, and then get the benefits for individual Londoners.

Mike Tuffrey, Chair: Thank you very much for your time. We have covered a lot of ground this
morning. The picture that emerges for me is one where London has got its act better together in this
area. There is always room for improvement, and some specifics have come out in terms of things we
might do differently or better in the future. We, as a Committee, will be considering those and we will
be back in touch with you.

Jennette Arnold (AM): I think there were some interesting issues that came out of this that could
actually be highlighted for the next administration in terms of issues that the GLA could lobby on. I
want to make sure that those are highlighted and that we can actually just make sure that they are
put together so that they are not lost.

Mike Tuffrey, Chair: Indeed. I would think that our intention is to try to pull this together into
some sort of short paper, and then feed that into our Committee’s future focus paper. I absolutely
take that on board.

                        Economic and Social Development Committee 10.2.04

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