Financial Report Feb2012

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Financial Report Feb2012 An interim review into the impact of the Financial Services Sector in West Cheshire and Chester and its immediate sub-region Centre for Labour Market Development University of Chester First published 2011 by the Centre for Labour Market Development University of Chester Parkgate Road Chester CH1 4BJ Printed and bound in the UK by the LIS Print Unit University of Chester Cover designed by the LIS Graphics Team University of Chester © Centre for Labour Market Development, University of Chester, 2011 All Rights Reserved No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means without the prior permission of the copyright owner, other than as permitted by current UK copyright legislation or under the terms and conditions of a recognised copyright licensing scheme A catalogue record for this book is available from the British Library ISBN 978-1-905929-96-2 This report has been produced by the University of Chester’s Centre for Labour Market Development (CLMD) at the request of Cheshire West and Chester Council. CLMD is a key research centre within the University of Chester’s Faculty of Business Enterprise and Lifelong Learning. The Centre focuses upon developing the knowledge base to support the economic and social capital of the North West. This report has been prepared by Professor Phil Harris, Executive Dean of Business, Enterprise and Lifelong Learning and Westminster Chair of Marketing and Public Affairs Professor Chris Pyke, Associate Dean and Head of Chester Business School and Bank of America Chair of Consumer Financial Services Dr Simon Adderley, Assistant Director of the Centre for Labour Market Development The information and advice within this report has been produced with all reasonable care in respect of accuracy and correctness using nationally recognised sources of statistics and advice from the organisation who commissioned the document. The Centre for Labour Market Development acknowledges the assistance and support given by the organisations that have provided information for the development of this interim review of the Financial Services sector within our region. Centre for Labour Market Development University of Chester Parkgate Road Chester CH1 4BJ 2 Contents page Appendices 4 List of figures 5 List of tables 6 Executive Summary 7 Introduction 9 Purpose of the study Methodology Geographic Scope Sectoral Scope Developing an intelligence base Structure of the report Policy and Context 15 European and National Policy Context National Market Performance Mapping the sector 24 Size and nature of the sector Strategic companies Market Performance Benchmarking Qualitative Review 36 Methodology Key findings Context Vision, Leadership and Decision Making Impact and Effectiveness Image, Awareness and Partnership Risk Assessment 47 Workforce and labour market Higher level skills Transport infrastructure Government policy risks Recommendations 63 3 Appendices A: Glossary of Terms B: Comparative analysis of data sources utilised within the report C: CH1 Postcode coverage D: Definition of ‘Financial Services’ E: Companies within the study area FSA Authorised Companies FSA Recognised Appointed Representatives Payment Services Firms Debt Management Firms FSA Recognised Introduction Agencies FSA Recognised Exempt Professional Firms F: Strategic companies G: HEI support within reach of the study area 4 List of Figures page Stages within the report production 10 Illustration of the geographic areas covered by the report 11 Financial Services and constituent sub-sectors 12 GVA of financial services as part of the total UK economy, 2000-2006 16 Financial assets in selected major economies, 2004-2008 17 Top ten centres of commerce in the world 18 Growth by financial services sub sector - GVA (1994-2008) 19 Financial Services contribution to GVA growth (1997-2007) 20 Revealed comparative advantage 23 Finance and Insurance enterprises and sites across the MDA 27 Approximate GVA of the Financial Services sector across the MDA area 32 Travel to work distances from Chester Business Park 50 Home location of new starters at Bank of America 2009-present 50 Key Factors in the development of a future Strategy 64 5 List of Tables GFCI Ranking, September 2009 17 Banking and Financial Intermediation activity by Local Authority 25 Insurance and Pension Funding activity: MDA 25 Legal and Accountancy activity: MDA 26 Real Estate activity: MDA 26 Distribution of companies by number of employees and sub-sector across 28 MDA area 'Strategic' companies within the study area 30 Relative sector performance of Cheshire (1995-2007) 31 Relative performance of Business services and Finance (1995-2007) 32 Local Authority benchmarking of CWAC Financial Services Sector 33 City Regional benchmarking of MDA Financial Services Sector 34 Proportion of LCR employees within CWAC by sub-sector 35 Comparative numbers of people economically active 51 Comparative Job Density of Cheshire West and Chester Council area 52 Summary of risks and their potential impact 62 6 Executive Summary This paper has been prepared by the University of Chester’s Centre for Labour Market Development in response to a recognised need for a greater understanding of the financial services sector within Chester and its sub-region. It undertakes a quantitative and qualitative analysis of the Financial Services sector in its current form and details a series of potential risks to the sector before recommending a range of actions to support and foster the sector across the region. The report contains the following key findings: Finding 1: The sector exists within a changing framework of national activity and regulation as well as a changing level of support from statutory partners. Finding 2: West Cheshire and Chester has a significant financial cluster which is comparable to other cities with high levels of financial services. Finding 3: The Mersey Dee Alliance (MDA) has a significant financial services cluster which is comparable to other city regions. Finding 4: West Cheshire and Chester is a significant driver of the Liverpool City Regions financial services cluster, particularly in the banking sector. Finding 5: The sectors shape is that of a pyramid, comprising a large number of small and medium sized enterprises and a few large ‘strategic’ firms. Finding 6: Senior figures within the Financial Services sector feel that the recession has had a significant impact upon their business model and operations. Finding 7: The Financial Services sector remains committed to the West Cheshire and Chester area. 7 Finding 8: The Financial Services sector impacts in a number of intangible ways upon the local economy through CSR activities and place ‘branding’. However, these have not been mapped within this report. Finding 9: There are no significant ‘local’ risks in the short term to the continuation of the sector, and indeed the local economy is well placed to support the sector compared to similar locations. The report recommends the development of a regionally based strategy and action plan to support the sector. 8 Introduction Purpose of the study This report has been prepared by the University of Chester’s Centre for Labour Market Development (CLMD) in response to a recognised need for a greater understanding of the financial services sector within Chester and its sub-region. The report outlines the economic impact of the financial services sector and highlights the risks, barriers and opportunities currently available to the sector. It also proposes developing a more precise model for measuring the potential impact of national, trans-national, regional and local public sector policies upon the sector and vice versa. The study utilises econometric and qualitative data from a variety of sources to produce a detailed picture both of the economic impact of the sector within the study area and the perceptions of key stakeholders within the sector. This information forms the basis of a series of recommendations to policy makers. Methodology The methodology utilised for this report is outlined overleaf and reflects that put forward within the project proposal. 9 Figure 1: Stages within the report production Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 •Mapping sectoral • Qualitave review • Risk Assessment • Recommendaons • Final Report acvity • A qualitave map of • An analysis of current • A series of • Co‐development of • provision of a the views and services and business recommendaons findings with Cheshire quantave map of aspiraons of the models against based upon the West and Chester the current financial sector. changing regulatory report to feed into Council. sector within Cheshire • Unstructured frameworks and a future public policy. • Final raficaon of West and its interviews will be changing economic report. immediate sub‐ held with senior and policy context. • Report Presentaon. region. figures from across • Use of stascal and the sector to develop quantave data to a qualitave build up a picture of understanding of the sector within the their percepons of study area. the sector and its future. Geographic scope The report is primarily concerned with the spatial area of the City of Chester and its economic and political sub-regions. However the nature of the data discussed and the strategic context which has underpinned previous policies means that a number of sub-regional geographies are included within the report. These include: • Cheshire West and Chester (CWAC): Incorporating the local authority area of Cheshire West and Chester Council
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