Offering a candid perspective on regional investment, economic potential and the long-term vision behind Develop North PLC - journalist Simon Rushworth, talks to Ian McElroy, Chief Executive, Tier One Capital and founding board member of North East investment company, Develop North PLC.
The interview explores the concept of the North East’s ‘money drain’ and sets out a compelling case for keeping investment within the region to drive growth, opportunity and lasting impact.
“More than one hundred billion pounds belongs to people who live in the North East,” Ian explains.
It’s the kind of sum that naturally elicits a sharp intake of breath – a transformative amount that could truly reshape our region.
“You might have some savings, your next-door neighbour will invest in some stocks and shares and the lady behind the bar at your local will have a little pension.”
Does a lifetime collection of limited edition 50p pieces stored in a chipped Doulton sugar bowl count?
“Look, it all adds up, whether it’s £100 or £100,000,” Ian points out. “Put all of our region’s money into a big pot and that’s more than £100bn that belongs to the North East. Pretty much none of that is invested in our region.”
“What happens is that we put our regional worth into savings schemes month after month – and I’m including pensions here – without thinking about where it’s going or what it might do to benefit our region,” adds Ian.
“Think of it like a giant holdall of North East cash. We drop it off at Newcastle’s Central Station and wave it off to London, never to be seen again.”
“What makes it even crazier is we then have these trade missions all over the world to ask for the money back! Don’t get me started on inward investment. People talk about the North East brain drain – this is the North East money drain.”
“Develop North’s Investment fund aims to plug that drain.”
It turns out Rachel Reeves is of a similar opinion when it comes to the perceived ‘craziness’ of the current situation. At last summer’s Mansion House speech, the Chancellor addressed pension reform and pledged to ringfence 5% of local government pension scheme assets for investment in regional growth.
“The decision to amend the Pension Schemes Bill to include investment companies is welcome news for Develop North, opening the door for pension schemes to play a greater role in funding infrastructure, housing and regional growth.”
How would that look in the North East? The latest published reports reveal that the Tyne and Wear Pension Fund (TWPF) had net assets of £13.5bn. Under Reeves’ reforms that would translate to a guaranteed £675m investment in regional growth.
“I’ve long advocated for a hypothetical 1% contribution and even that would equate to £135m,” adds Ian. “It’s no small sum. Five per cent of the TWPF could do so much good for the people who already pay into its fund.”
“We simply want to retain what’s ours. Keep North East money in North East hands. We’ve launched an investment fund that’s accessible to everyone. If we’re going to invest in the region, we want that to be an opportunity for everyone to invest in the region. If people have ownership of assets in the place that they live and work, I can guarantee you that connection between people and place will be way higher than anywhere else in the country. We’re so passionate about our region and as a wider community we want it to thrive.”
“Develop North offers an opportunity to the people of the North East to invest in the North East. See where your money goes, experience its effect and celebrate its impact. Oh, and enjoy a return on your investment too.”
“Now with the combination of devolved regional powers – and we anticipate working alongside the North East Combined Authority and the Tees Valley Combined Authority by complementing public sector investment with private sector money – and the Saudi ownership of Newcastle United means the spotlight is on our region right now.”
Right person at the right time
“But to take the next step we needed a recognisable and well-connected CEO, rooted in our region, with experience of both the public and private sector,” explains Ian.
“A figurehead. As luck would have it I had a coffee with that person last year…”
By the time Michelle Percy left her prominent position as Director of Investment and Place last summer, one of the North East’s most proactive regeneration and investment leaders had held four key roles across nine years at Newcastle City Council. Prior to that, her private sector experience included oversight of a series of commercial and mixed-use developments. Develop North felt like the perfect fit.
“If you’re going to appoint someone to be chief executive of a PLC, they have to be an experienced business leader,” adds Ian.
Michelle stepped into her Develop North role towards the end of January. Two months down the line and Ian reports the board’s key hire has hit the ground running.
“I probably underestimated just how connected Michelle is,” admits Ian. “Not just in the North East but also nationally and internationally. She’s also brilliant at managing people. We’ve been hugely impressed at how she can bring a team together quickly.”
“Michelle is raising Develop North’s profile and raising awareness. That experience of the private and the public sector is priceless at this stage of our journey.”
So what does the future hold for Develop North? Flick through the firm’s website and the key numbers that flash across a clean homepage are hugely impressive: 12,000 jobs created with their help; almost £90m in real estate investment raised since 2017; 43 projects undertaken with 35 developers; and a gross development value in excess of £280m. According to Ian, it’s only the start.
“The surface has only been scratched.” says Ian.
www.tieronecapital.co.uk
developnorth.co.uk