Where is the best place to do business in Britain?

GB uncovers which cities tick the right boxes for business – and which don’t

Let’s make one thing clear from the start: we’re not talking glamour, we’re talking business.

London is without doubt Britain’s sexiest city. It’s got the best restaurants, culture and nightlife. It’s also the hub of Britain’s political, economic and media activity and has easily the highest profile – with or without the 2012 Olympic Games. However, London is also incredibly expensive to live in, rent premises in and hire staff in. It’s almost impossible to drive into, around or out of and is a nonsensical location from which to distribute goods to the rest of Britain. With this in mind, and without excluding London, we set about finding where the best place to run a business in Britain really is.

Methodology

The evaluation process began by identifying what you, the entrepreneur, would consider if you were looking to relocate, expand, buy or start a new business in any area of Britain. We settled on seven factors, broken down into the following sub-categories:

… Location (population; region)

… Workforce (availability; quality; skills; labour costs; universities)

… Premises (office stock; local authority business rates)

… Quality of life (house prices; schools; crime)

… Grants and funding (available grants; business angel networks; regional venture capital)

… Transport (average road speeds; motorways and airports)

… Business activity (business population; growth rate; corporate insolvencies)

We devised a unique scoring system approached from a practical, no-nonsense standpoint, consistent with the magazine’s editorial bent and applied it to the largest 20 centres in Britain, and therefore the likely focus for the majority of you. The group is also the same as that surveyed by OMIS Research for Cable & Wireless in July 2004, which provided statistical data for a number of the report’s categories. Finally, the total scores were converted to a percentage and ranked from one to 20.

The findings

Location

There’s no getting away from geography. The basics are obvious but unavoidable and, for some businesses, where the selection process starts and finishes. The Midlands is the logical choice for companies that distribute goods to the rest of Britain. The North East, North West, South West, Scotland, Wales and Northern Ireland don’t share that luxury and are also a long way from London. And, of course, London’s superior transport facilities don’t make it any closer to the rest of Britain.

Unsurprisingly then, cities in the Midlands scored high for ‘location’ while those on the coasts and north and south extremes scored low. Cities not based centrally but near to other large cities, such as Manchester, also scored well – as did London for its location at the centre of the vibrant South East and its access to the continent.

Workforce

Geography is closely tied in with social-economics and our findings did little to dispel notions that a north/south divide still exists. It came as no shock that London had by far the highest paid workforce with an average annual salary of £33,118, or that the lowest wages were paid in northern cities traditionally associated with high unemployment and social deprivation, such as Sheffield and Newcastle.

Factoring in workforce skills and qualifications only widened the gap. London, Bristol and Southampton scored significantly higher than former industrial hotbeds Newcastle, Sunderland, Hull and Birmingham. However, strong performances by the three Scottish cities suggests Scotland’s educational and vocational systems are doing a better job than the rest of Britain at repositioning its formerly industrial labour market.

Cities were also scored on availability of workforce within a 30-minute catchment area with data sourced by OMIS Research. London, being so densely populated, scored highly but other cities showed their access to workforce is far larger than population figures suggest. For instance, while Birmingham has a population of 970,892 it has 1.08m workers at its disposal, whereas Manchester, with a population of almost 600,000 fewer, has 1.18m workers in surrounding areas. Likewise, Nottingham, Bradford, Sunderland and Newcastle can reach more than twice their immediate population.

Overall though, from an employer’s perspective, our findings conform with the accepted theory that large post-industrial towns have plentiful resources of lowskilled workers with low salary expectations, and that there are more skilled and better educated workers in the South – but they cost more. Scottish cities, particularly Glasgow and Edinburgh, proved the exceptions to the rule; offering a skilled, educated and moderately waged workforce.

Education and skills cannot be changed overnight and it would have been unfair of us not to consider the effort some cities are clearly making, so we also examined the higher and further educational institutions available. London, again, got maximum marks for variety and number. However, Manchester, Birmingham, Cardiff, Leeds, Sheffield, Liverpool, Leicester and Bradford all made up for the poor performance of existing workforces.

Premises

While businesses often decide or are offered incentives to move to an area for the attributes of its workforce – whether skilled or low-cost – the availability and cost of premises is also a major consideration. For instance, London may be comfortably the most expensive place (based on business rates) to hire an office, but it’s virtually without rivals on stock. London has more than 28m square feet of office space with Manchester practically out of sight in second place with 2.15m. Hull, Bradford, Liverpool, Leicester and Belfast were the cheapest but, except for Liverpool, had limited availability. The mass regeneration of Manchester, Birmingham and Liverpool undertaken in recent years ensured all three cities scored well for availability and value.

Transport

While attractive city landscapes and waterside views are preferable, what really makes a good location for an office or warehouse is accessibility. In evaluating how easy it is to get to each city centre, we considered motorway access and speed of traffic – ask anyone in London if 10 miles is a long way and they’ll give you a different answer to someone in Glasgow. To demonstrate the point, the average traffic speed in London is a painstaking 11mph compared to Glasgow’s 30.3mph, which also boasts excellent access south via the M74 and east with the M8. Birmingham’s much-mocked Spaghetti Junction may be an eyesore but it offers superb motorway links in every direction and keeps traffic moving at a respectable 23.4mph. Coventry, just down the road, rides happily in its slipstream at a speedier 28.6 mph.

Quality of life

If you’re going to up roots and move to the other side of the country, or even a different country, the likelihood is you’ll also consider what’s good for you and your key staff – not just your business. That’s partly why we also considered standard of living as an important factor. We’ve already rubberstamped London as the sexiest city, but trying to mark all 20 cities on cultural value of their arts is a stretching of subjectivity we’ll happily leave to the EU. Easier to measure are the more basic elements of setting up home: quality of schools, risk of crime and house prices.

Building on their impressive university performances, Edinburgh, Cardiff and Birmingham had the highest number of students achieving a minimum of five A-C GCSEs (or equivalent), with Glasgow, Newcastle and Coventry also showing well. Britain’s safest city is Bristol according to our findings. Also reassuringly low-risk are Sunderland, Glasgow, Coventry and, perhaps surprisingly, London – and so, tangibly, these areas enjoy lower insurance premiums. The same can’t be said of Nottingham, our crime capital, and also Manchester and Hull.

With £382,671 the average price for a semi-detached house, London is the most expensive place to live, followed by Cardiff and Edinburgh. Outside those three capitals, house prices tend to mirror earnings with a north/south divide. Southampton is the next most expensive, with Hull and Liverpool the least. In terms of value for money, Glasgow combines good schooling and low crime statistics with an average house price of £103,999. This is more than 30% less than the average price in neighbouring Edinburgh, despite Glasgow scoring higher for workforce and transport links. Similarly, the short distance between the two cities ensures Coventry shares many of Birmingham’s benefits but undercuts it on house prices by more than £10,000. For a real bargain, Liverpool can’t be ignored with impressive school pass rates and a top 10 finish in the crime league. Its naming as European Capital of Culture for 2008 also reflects its growing status and profile.

Grants and funding

Savings on workforce, premises and housing aren’t the only reason to consider relocating – financial incentives are often available. The government is keen to dissolve the north/south divide we’ve proved still exists and to decentralise funding and business focus out of the South East. Regional Development Agencies are the main source for accessing both national and EU grants and funding tends to be proportionate with the an area’s need for regeneration. Sheffield and Liverpool showed up on our radar as having the most and largest incentives for growing businesses, having both secured Objective I funding. All the Scottish cities also offered excellent incentives with Business Growth Funds of up to £100,000 for certain sectors.

Private investment seems less inclined to lead geographical diversification, however. While many larger business angel networks had satellite offices outside London, these were mostly restricted to the larger cities such as Birmingham, Manchester, Bristol and Edinburgh. For instance, the National Business Angels Network website (www.bestmatch.co.uk) has no listings for networks in Leicester, Nottingham, Hull, Aberdeen or Sunderland – although in some cases other cities’ networks include them in the catchment area.

Business activity

So where is business thriving? Research by Royal Mail revealed the business population in Belfast grew at a higher rate than anywhere else in Britain between 2003 and 2004. Bradford, Leeds, Liverpool, Leicester, Sheffield and Hull also reported increased levels of activity. Arguably indicating that businesses are increasingly considering relocation, London, which has the largest mass of businesses in Britain, saw its population reduced by 2.5% – more than any other city.

At this point it would be wrong for us not to give mention to several hubs of entrepreneurial activity excluded under our criteria of assessing the 20 largest cities. Several new towns, most notably Telford, are establishing themselves as centres for business activity by focusing on particular sectors, such as research and design, technology and biochemistry. Smaller cities such as Oxford, Cambridge, Milton Keynes and Reading are also densely populated by businesses and cater for sector specialisation.

The leading pack

‘It was ever so close in the end,’ is a cliché usually reserved for judges and quiz show hosts. It was true for our findings but no real surprise. We deliberately set a wide criteria so no one factor could swing it for one particular city. London, as we’ve already mentioned, would have probably won if that were possible. In truth, its many advantages are countered by a few glaring weaknesses. Nonetheless, anything but a top three position would be a disservice to a city with so much to offer and one that scores so highly for so many essentials.

However, two of its major downfalls – location and traffic congestion – saw it beaten to second place by Birmingham, whose location at the heart of the country gives it enviable access to the rest of Britain, while its clout as Britain’s second largest city helped it perform well over many other criteria.

Glasgow

In Glasgow, our ‘best place to do business’, we found a city that ticked every box of what you need to successfully grow your company. Performing consistently well across all our criteria, Glasgow proved that, of all the cities facing a similar challenge, it’s adjusted best to post-industrial life and recreated itself as a modern centre of entrepreneurial activity.

On hearing the results of our report, Jim Wallace, enterprise minister for Scotland, said: “We have undergone a major transformation in the last 30 years from a high degree of heavy industry to a much more diverse economy.

“Scotland is a great place to do business and I am delighted Glasgow has performed so well. Our priority is ensuring growth continues. To achieve this, we have put in place a framework that tackles issues including skills, transport and support for growth. Initiatives such as this help us nurture a strong and dynamic economy.”

THE TOP FIVE:

SEXIEST CITIES

London

Manchester

Leeds

Birmingham

Glasgow

CRIME HOTSOTS

Nottingham

Manchester

Edinburgh

Hull

Aberdeen

FOR FUNDING

Sheffield

Glasgow

Liverpool

Edinburgh

London

FOR PREMISES

Liverpool

Birmingham

Manchester

Newcastle

Glasgow

FOR WORKFORCE

Bristol

Edinburgh

Leicester

Cardiff

Belfast

THE WINNER: GLASGOW

Glasgow is traditionally known for industry and football. While Rangers and Celtic are still locked in a fierce Old Firm rivalry, Glasgow in recent years has changed as a place to live and do business. A decade of aggressive regeneration is starting to pay dividends. Key prospering industries include financial and business services, communications, biosciences, software and tourism. The financial and business services sector now accounts for 24% of employment in Glasgow, while jobs in the knowledge industries grew by 22% between 1998 and 2001.

Glasgow now boasts:

? Higher employment gains than anywhere outside London

? 168,000 students (second only to London)

? 3.1 million tourists a year ? the fastest rate for growth for visitors of all British destinations

? Europe?s fastest growing conference destination ? doubling market share since 1997

? More businesses than any other Scottish city

? Outward trade of more than ?1bn

? 62 university or research spin-out businesses in the past five years

Existing and continuing regeneration projects include:

? Clyde Waterfront, a 15-year initiative to encourage regeneration and economic investment in the area?s waterside locations

? Crown Street Regeneration Project, a 10-year regeneration scheme in the Gorbals area which includes Riverside Business Park

? Nova Technology Park, which provides premises for science and technology companies keen to expand from pure research into manufacturing

? Pacific Quay, a 60-acre site already the home of Glasgow Science Centre and Glasgow Tower and currently developing a ?100m digital media centre and business park

? The International Financial Services District, a ?500m project designed to create an attractive environment for indigenous and overseas companies in the finance sector seeking a new location for their operations

 

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