Select Committee on BBC Charter Review Written Evidence

Memorandum by MIDAS

  MIDAS is the inward investment agency for Greater Manchester and is part of the Manchester Enterprises Group, the Economic Development Agency for the sub-region. During 2004-05 MIDAS directly assisted in the creation of 2,199 new jobs and attracted new investment of £48.8 million. (1)


Does the BBC's proposed move to Manchester represent value for money for the licence payer? Should the BBC continue to decentralise?

  The North West is the largest television production centre outside of London with Granada and the BBC located in Manchester and Mersey Television in Liverpool, producing 1,310 hours of network television (2002)—three times greater in volume than any other English region and more than the combined output from Scotland, Wales and Northern Ireland.[9] The impact of regional activity within the sector was clearly demonstrated in the study The Regional Impact of Granada TV[10] that showed that whilst Granada TV employs around 1,100 people directly in the region they also generate an additional 2,900 jobs and that the overall employment generates over £100 million for the region's economy. It is likely that the relocation of 1,800 BBC jobs to Manchester will produce a similar multiplier both in terms of employment and GVA across the North West. (2)

  The Northern Way initiative, inspired by the desire of the Deputy Prime Minster, John Prescott, to capitalise on the assets of the North and speed up the rate of change in the regions is representative of the focus that the UK Government has given to economic development within the regions. The current £30 billion output gap between the North and South is evidence of the need to initiate investment within the regions to ensure that the UK economy is capitalising on its total asset base.[11] (3)

  Distribution of the employment and wealth created by the BBC, a public sector body, is representative of the Government's desire to generate a less London-centric UK economy and stimulate regeneration, innovation and entrepreneurial activity across the regions. In terms of value for money for the licence payer, such employment and wealth distribution can only prove to produce benefits within the region that transcend any initial investment that may be required. (4)

  The North West has a population of over 6.7 million people or 11.5 per cent of the population of the UK. The BBC relocation to Manchester will directly affect the economy of the North West region not just Greater Manchester. Increasingly, the North West is becoming recognised as a cultural and creative region as can be seen by Liverpool's Capital of Culture 2008 status. Creative industries represent 4.5 per cent of the regions GVA and employ in excess of 146,000 people across 13,474 businesses.[12] The BBC relocation to Manchester represents a significant opportunity for existing creative companies and will also generate new ventures across the region. (5)

  Since the BBC relocation announcement North West Vision, the regional screen agency, has awarded regional attraction fund awards to three independent television producers that have established new operations in Manchester, Hat Trick North, Baby Cow and Channel K. Such private investment from independent producers is linked to the opportunity that BBC program commissioning in the region would represent. Each of these companies is employing local people and intends to produce their programmes within the North West region. Channel K have teamed with Karushi Management to focus on signing emerging comedy talent in the region. They are committed to ensuring the programmes they produce reflect the strengths and culture of the North West region. This approach will enable the region to be represented across the UK and internationally. (6)

  Investment is being made within the region from the private sector to support the opportunities that the BBC relocation represents. Manchester's potential position as the UK's second largest film and television economy is already generating investment. A new venture to establish a production studio for retail television shopping channels is being pioneered by a group of Manchester based entrepreneurs that recognise the increasing supply of talent that the BBC relocation will provide in the region. (7)

  The BBC relocation to Manchester also represents the opportunity for the region to develop and retain much of its creative talent. London is currently viewed as the city of choice for most people within the film and television industry. BBC commissioned programs within the region will provide the opportunity for local talent to remain within the region and thus ensure that regional culture is represented within the programmes offered to the UK. (8)

  Economic development and inward investment practise has, to some extent, been based on the theories developed by Michael Porter in his analysis of the effects that clusters have on competitive advantage. Porter states that "The competitive advantage of a location does not usually arise in isolated companies but in clusters of companies—in other words, in companies that are in the same industry or otherwise linked together through customers, suppliers or similar relationships".[13] Greater Manchester has developed a considerable creative industry cluster in the last 10 years. Indeed, employment in the sector has grown by 30 per cent during this period.[14] Over 90 per cent of regional businesses within the sector employ less than 10 people[15] and it is these micro businesses that stand to gain from the BBC relocation. Evidence exists to suggest that clustering and networking helps companies develop and that this is particularly acute for SMEs.[16] The relocation of the BBC to Manchester is likely to increase the amount of private investment into the region as the cluster expands to take advantage of the opportunities the BBC will create. (9)

  The convergence of content delivery and technology within the media and ICT[17] sectors also represents a significant opportunity for the region. Where content delivery has previously been the territory of the main broadcasters this is increasingly being seen as the next market for businesses such as telecoms operators, portals and Internet service providers. Increasing the regional cluster via the BBC relocation will strengthen the ability of the area to be seen as a potential inward investment location for companies in these technology markets. The opportunity to create a cross-sector cluster in the North West region would also give the BBC access to innovation and market leading companies that can contribute to the direction of the BBC. Evidence of this dual approach to inward investment can be seen in the success of areas such as Kista in Stockholm and Nydalen in Norway.[18] (10)

  MIDAS has assisted several large organisations in their consideration and ultimately, choice of, Manchester as a key business location. In our experience organisations, such as the Bank of New York, have selected Manchester because it is able to provide all the required business services, skills, labour and infrastructure found in London at a lower operating cost. For example, the cost of office space in Manchester is considerably less than comparable offerings in London[19] and salary levels are typically 25 per cent lower. In terms of value to the licence payer, relocating the BBC to Manchester represents a lower cost alternative to London. (11)

  The relocation of the BBC to Manchester represents an opportunity to distribute the considerable benefits that the organisation brings to the wider UK community. Such an initiative will strengthen the regional economy and increase the representation of the regions within BBC programming. Value to the licence payers will be evident in terms of the impact that a wider BBC organisation will have on the regional and thus UK economy. (12)

7 October 2005

9   A snapshot of the Creative Industries in England's North West-Culture Northwest 2004. Back

10   Manchester Business School report 2002. Back

11   Moving Forward: the Northern Way (2004). Back

12   Benchmarking Employment in the Cultural Industries-North West Bulletin March 2003. Back

13   Michael Porter (1995) The Competitive Advantage of the Inner City, Harvard Business Review May-June. Back

14   Greater Manchester-Business Skills North West Sectoral Research-Creative Industries 2004. Back

15   Manchester Media Enterprise Zone-Feasibility Report, nmp April 2005. Back

16   Principles for Promoting Clusters and Networks of SMEs, UNIDO, October 1995. Back

17   Information Communication Technology. Back

18   Manchester Media Enterprise Zone-Feasibility Report, nmp April 2005. Back

19   King Sturge Rental Report Q2 2005. Comparable Grade A office space in Manchester costs £27.50 sq ft and in London, cost £45.00 sq ft. Back

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