Katy Dowell reviews Glasgow's growing international financial services district
As I walk through Glasgow's burgeoning new financial district a Glaswegian tells me: "Glasgow is the poor relation of Edinburgh." This might be the reputation which Scotland's second city has been burdened with in the past, but things are changing.
Glasgow City Council has joined with Scottish Enterprise Glasgow (SEG) to plough £750m into developing the city's financial district. And they are on a mission to attract insurers and brokers to the area.
Glasgow's historic heart, the Merchant City, boasts impressive architecture. Walk 10 minutes out of the Merchant City and it is like walking through a time warp into the 21st century. The £750m cash spree by the city council and SEG has gone a long way.
In 2001 the SEG and the city council set the agenda for a 10-year regeneration of Glasgow's financial district. On the agenda was a plan to attract financial services, insurance companies in particular, to set up in the 'square kilometre'.
Richard Cairns, head of social and economic development for Glasgow City Council, can reel off a list of reason why insurers should come to Glasgow. "We have a good supply of skills, there is a massive amount of inward investment, so people want to be here because there are jobs here, and our transport system is second to none," he says.
According to a report commissioned by the Office of the Deputy Prime Minister, what makes a city successful is its transport links and educational qualifications. The study focused on English cities, but, said its author, Michael Parkinson: "Attracting and retaining graduates matters. Connectivity - good transport links - is also vital, and an airport is important for economic success."
And insurance is naturally in on the boom. In England, Aon has restructured and closed several regional offices, yet it remains a fan of Glasgow.
Murray Cromar, Aon client director, travelled to work from his family home in the country on the morning I met him. It took 15 minutes. It is a quality of life that few can afford in London where the average commute takes between 30 minutes and two hours.
Cromar says Aon is more likely to recruit and retain quality staff in Glasgow. He says: "Glasgow has a lot of high value jobs. We are looking for quality individuals who have a background in insurance. Glasgow is ideal for that. It is a city which doesn't seem to have a problem with teams of people moving around as is the case in London.
"You would find that a significant proportion of our staff have been here a long time. There isn't a huge turnover of staff." He also refers to the transport links: "The air links and the railway are excellent. Getting to the airport takes 10 minutes, and it is very easy. For us as a global broker, its serves all our needs."
Norwich Union's (NU) Bishopbriggs centre, on the edge of city, employs 2,000 call centre staff and 140 underwriting staff. Ron Burkey, NU business manager, national brokers, echoes the sentiments of Cromar and Cairns - education and transport are Glasgow's strength. I begin to think that they have been primed to talk to the journalists visiting the city.
Heath Lambert has also taken the plunge into Glasgow, opening an office in Glasgow in a bid to expand its presence in the Scottish market. Alan Carnegie,
managing director, Scotland, at Heath Lambert, said the move would be significant for the company by opening up an "untapped" market.
Heath Lambert currently has offices in Edinburgh and Aberdeen, but these are part of historic acquisitions. Carnegie says the Glasgow office is important for the company to develop its business outside these regional areas. "For local authorities and west coast industries, we need a presence in the Glasgow area," he says.
One interesting factor is that selling insurance in Scotland is culturally different to that in England. Burkey says buyers want to know that their supplier is supportive of the local economy, and has independent roots.
It is a view which has prevented Scotland's broking fraternity from consolidating at the same speed as England.
"Scotland hasn't seen the consolidation which England has," says Burkey. "Brokers like their independence and confidence. Why do you think Towergate hasn't been successful in acquiring a Scottish broker?"
Aon also believes publicly supporting local economies is the way of the future.
"We think it is vital to support the market. We need to support the local market with premium income," says Cromar. "There are more and more insurers moving out of London to support the local market."
Is London therefore losing its grip as the financial heart of the UK? Unlikely. But it is true to say that Glasgow's insurance community is dealing with a set of 'ethical' buyers, even in the commercial arena.
"There is a lot more family type entrepreneurial business competing with regional businesses in Scotland," says Cromar.
Couldn't Leeds say the same of its financial businesses? Does Leeds pose a threat to Glasgow's drive to attract new business? Cairns confidently dismisses its strength: "Leeds isn't a competitor as a city in terms of image, city and economy."
Here comes the PR spiel. "We are the second largest retail centre in the UK [London is number one], we have the sixth highest retail economy in the world and a massive growth in international conferencing, a tenfold increase in the amount of hotel beds in 15 years."
The list goes on, and he does have some valid points. But still I cannot help thinking that there is a missing link in Glasgow City Council's marketing drive. Are there financial incentives which Glasgow can offer new businesses?
Ace European Group has its sights set on tapping into the market. It announced a restructure in March which will see its claims and finance departments relocating to Glasgow.
The Scottish Development Agency (SDA) has handed over a grant which will support the move from Aces's South East base. With the insurer planning on taking up five floors of office space in the international financial services district it is likely that more jobs will be located to the city in the near future.
Flying back to London the image of Glasgow as a poor relation of Edinburgh struck me as old hat. The city I visited exuded an atmosphere of vibrancy. It was certainly not slipping into crumbling decay.
Insurers are beginning to realise the potential of this untapped market, and brokers are following their lead. By 2011 the city's economy will have drastically altered, and those who get in first will reap the benefits. IT