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In this issue...

Innovation – the centre of corporate strategiese
Lord Sainsbury, UK Minister for Science and Innovation
British Innovations
On the road again
Christopher Macgowan, Chief Executive, Society of Motor Manufacturers and Traders
Fossil Fuels – An Energy source for the Future
Greg Lewin, President, Shell Global Solutions
Chain of success
Kenny McKay, Director, and Will Wright, Manager, Restructuring practice at KPMG
Innovation and the Patent Office
Lawrence Smith-Higgins, Head of Awareness Information & Media The UK Patent Office
Benefits of association
Dr Michael Moore, CEO, PIramed Ltd
Innovation and strength in the UK biotech sector
Aisling Burnand, Chief Executive, BioIndustry Association
Simfonec: Helping make good research BIG business
Heron Evidence Development: Successful deal of missed opportunity
Springwell Ltd: Match-maker for Innovative Technologies
Korn/Ferry International: Pharmaceutical companies desire to break the mould
A quality core interface
Dominique Kleyn head of BioPharma Business Development, Imperial College London
Evolutec Group: Creating a range of commercial options
Moving forward
Dr Ceri Williams, Senior Manager, Science and Innovation at Yorkshire Forward and Dr Danielle Hankin, Bioscience Cluster Manager
Oxitech: Revolutionising SIT Programmes
Oxford Expression Technologies: Meeting the needs of the post-genomic era
Business Services
Innovating business related services
Norma Rose, Director-General, Business Services Association
BT: Innovation Strategy and Innovation Continuum
UK Film Council: How the UK wins in the international film industry?
On the defence
Major General Alan Sharman CBE, Director General, Defence Manufacturers Association
ProEtch: Precision parts of quality
Wallop Defence Systems: Aircraft Countermeasures and the Dual Spectral Threat
Education, Education, Education
Ruth Kelly, Secretary of State for Education and Skills
Applied Sciences at Wolverhampton - Innovation in Higher Education Professor Trevor Hocking, Associate Dean, International Development
Wind energy
Marus Rand, Chief Executive, British Wind Energy Association
Vital energy
Ian Leitch, Commercial Director, Energy Industries Council
Waterman Group: Solutions to solve climate control legislation
Winning the war against germs
Dr Ron Mitchell, Managing Director, GB Environmental
Show me the money! Funding for innovation – who can help?
UK: Innovation Nation?
Launching the “Innovation Nation?” initiative
Innovation in the 21st Century
Gemma Harman, Director of Strategy & Media, BT Chief Technology Office
UK Manufacturing - a driving force for innovation
Andrew Manly, Director General, Manufacturing Technologies Association
Waterman Group: Single project model 3D
Renishaw: Achieving global manufacturing competitiveness in the UK
Yorkshire Forward
The European Nanotechnology Trade Alliance
Del Stark, Chief Executive, European Nanotechnology Trade Alliance
University research drives a new wave of innovation
Omar Cheema, Nanotechnology Business Development, Imperial College London
Oxford Instruments: Enabling nanoscience and nanotechnology
Semefab (Scotland): A real driver of change
Metal Nanopowders: New products that meet your needs
Regional Development
London Development Agency: One jump ahead
91Advantage West Midlands: At the heart of it all 95

Business Services

Innovating business related services


The services sector of the economy accounts for around 73% of UK GDP. The position is similar in the European Union, which has recognised the vital role that business-related services play in the economy and has acknowledged their importance to the overall competitiveness of the European economy. Business-related services¹ constitute the largest sector of the EU economy employing around 55 million people in 2000.

The UK is in the lead in respect of financial and insurance services

The sector in the UK and across Europe stretches from high valueadded services (such as professional and ICT) to business support services as shown in Chart 1². Its inter-relationship with other sectors of the economy is complex, as is well illustrated in the chart drawn up by DG Enterprise as part of their work in this area (Chart 2³).


Business-related services is a major subsector accounting for business-to-business and business-to government services. Recent research by DG Markt and Services highlights the value added to the economy by these services. Chart 3 4 shows the role of business-related services in intra- EU service trade in 2001 (the most recent statistics available), while chart 4 from the same source shows trade openness in business-related services in that year. From this we can see that the UK is in the lead in respect of financial and insurance services but trails the Netherlands in relation to other relevant services. Overall, it is still way out in the lead compared to other members of the EU.

The business-related services? sector has been a major source of both new jobs and new businesses in the EU, covering a wide range of economic activities. More than two-thirds of all new enterprises start up within the area of business-related services, but this in turn leads to a need for better skills, greater use of ICTs and more innovation to drive the sector forward.

There is no reason why UK companies should not retain a market predominance or high market share

Before looking at the UK scene in detail, it may be useful to highlight the recent findings of the European Forum on Business Related Services set up by DG Enterprise which was transferred to DG Markt and Services at the end of last year. The Forum was established on 1 April 2004 as a follow-up to the Communication on ?The competitiveness of businessrelated services and their contribution to the performance of European enterprises? (COM (2003) 747). The Forum Report published in June 2005 concludes that:


These conclusions, together with the Commission?s proposal to follow them up with an Action Plan of non-legislative measures and to develop this in close collaboration with stakeholders were endorsed by the Competitiveness Council in the Conclusions of the meeting on 11 March 2005. (The writer is a member of the Forum and the only UK national on it).

Further action will include:

The UK compares well to most other European countries in these areas but the challenges, both internal and external, are still great. Across all parts of the sector innovation is necessary if companies are to keep up with the desires and expectations of clients. At the lowest level, cleaning and catering services need to develop new competencies and delivery methods if companies supplying these services are to remain in the market; facilities management has to respond to the increasing sophistication of clients; PFI and PPP contracts require the highest level of innovation and adaptability from operating consortia if public service are to be modernised; and ICT and professional services have to rise to the challenge of increasingly complicated requirements and contractual forms respectively. This is as true at the SME level as it is for FTSE 100 companies.

Companies cannot deliver highquality value-added services without staff who are appropriately qualified and suitably motivated to assist in that service delivery. This can be difficult to grasp, especially where wage costs are low and margins are tight but this is where the ?what goes round, comes round? principle points to the revolving benefit of all companies becoming involved in training and development. Large European and international suppliers of services rely on subcontractors and specialist contractors to have these high levels of competence to enable the whole contract to proceed successfully and, thankfully, on the whole it is achieved.

Companies cannot deliver high-quality value-added services without staff who are appropriately qualified

It is interesting also to view the increasing involvement of non-British companies in the UK market where they add value to our market and export value to other markets within the EU and worldwide. This permits our market-leading competencies and methodologies to be exported and to assist in the development of new markets for which UK companies can compete with other national companies. Further, it is exciting to note the number of multinational contracts which are being awarded to UK-based companies for the provision of a wide variety of services because of their accepted predominance in the field. This is particularly evident in property and facilities management where international groups are awarding contracts to UK-based companies for a wide rage of service provision.

Nowhere has this been more evident than in the recent development of offshoring of call centres and technical back-office functions. Starting with UK companies harnessing local expertise this has developed into a burgeoning national market in which national companies can begin to compete with foreign providers in this potentially lucrative arena which has the possibility to become the largest facilities management market in the world within the next 10 years.

One of the missing pieces in this jigsaw, particularly within the EU, is the mutual recognition of qualifications. This has bedevilled the EU from its conception and the goal remains as elusive as it was then. Posted workers are frequently required to requalify to satisfy national or local requirements. Of course, there will be national or local criteria which will need to be satisfied but these are not usually onerous. More (and often unduly) onerous are the requirements to comply with the tightly drawn requirements and local barriers to entry (such as licences, indemnity insurance, obligatory membership of trade and professional associations) demanded by local Chambers of Commerce in other EU countries or the refusal of national professions to recognise the qualifications of foreign nationals without rigorous national compliance before allowing them to practice. Here the UK leads the way and benefits from it. The multicultural nature of our workforce not just in relation to UK citizens but also other EU nationals who wish to work in the UK and other foreign nationals who fill skills gaps is fundamental to our success and to the ability to export best practice and ground-breaking ideas to other countries.

In short, new challenges are arising in the new abilities of foreign national companies to challenge UK ones in the same national and international markets. These are positive developments which help in the development of local, national, EU and international markets. There is no reason why UK companies should not retain a market predominance or high market share in these markets and continue to increase the competitiveness of the UK economy within the EU and worldwide.

Contact: Norman Rose
Business Services Association
Warnford Court
29 Throgmorton Street
London EC2N 2AT
Tel: +44 (0) 20 7786 6300

1 Business-related services are defined in
accordance with the following sectors in statistical
terms (NACE)
? Business services (NACE 70-74)
? Distributive trades (NACE 50-52)
? Network services (NACE 40, 41, 60-64)
? Financial services (NACE 65-67)
2 KPMG 2005
3 DG Enterprise, EC 2004
4 CPB for Forum for BRS, May 2005