With an eye on the future

IT’S fair to say Margaret Fay had no idea of what was in store when she reluctantly put her name forward to become chairwoman of One North East. It was December 2003 and no one could foresee the gathering financial maelstrom that would plunge the world into the worst recession for a century.

Twenty-two years at Tyne Tees Television, where she had worked her way up from the accounts department to managing director, had not prepared her for working in the public sector – and the new job meant she had to be ready to hit the ground running.

“At Tyne Tees, because I started on the shop floor and worked my way up, I knew the place inside out. I was uncomfortable not having a grip on everything,” she said.

“That’s my own personal style; I might not want to interfere, but I want to understand.”

And she didn’t have long to get comfortable.

Across the Atlantic, the storm clouds were already gathering. House prices in the US were rising at an unsustainable rate, and banks were handing out mortgages to people who had no hope of meeting re-payments. By 2006 these “sub-prime” mortgages represented one-infour US house deals.

Although this was largely a North American problem, the North-East was the first to feel the chill wind of recession when the Northern Rock spectacularly imploded in September 2007.

The bank had used its debt to supplement investment (a system known as leveraging).

When the property bubble burst, it was critically short of money and turned to the Bank of England for help. Investors stampeded to get their money out, creating the first run on a British bank in 100 years.

Ms Fay very clearly remembers the moment she found out. The stock market announcement was made on the morning the Financial Times came to the region to address a business audience at Hardwick Hall, in Sedgefield. There was plenty to talk about.

The Northern Rock was only the beginning of a crisis that would sweep the globe, tearing down some of the world’s biggest financial institutions.

As banks crashed and credit dried up, businesses failed and those that survived the initial shock wave shelved expansion plans for another day.

Surprisingly, the North-East was actually better prepared for the credit crunch than it had been for earlier recessions.

Then, the region was still grappling with the demise of traditional industries. The manufacturing base was unable to cope with even a modest recession.

This time, the region’s businesses are showing more resilience in the face of tough times.

Although Ms Fay should take some of the credit, she modestly praises her predecessors who recognised the need for a new kind of regional champion – the North-East’s centres of excellence. “They put money into the centres of excellence, investing in something that was by no means certain of success. Those judgements were ambitious and risky, but we are certainly reaping the benefits now.”

Boosting the region’s science capability was identified as the key to long-term recovery.

One North East helped set up the Centre for Life Sciences (Cels), in Newcastle, the Centre for Process Innovation (CPI) on Teesside, Net- Park, in Sedgefield and the Centre of Excellence for New and Renewable Energy (NaREC) based in Blyth, Northumberland.

All four carry out research and development.

They also co-ordinate the commercial exploitation of technologies emerging from these activities.

Clipper Windpower, a world leader in wind turbine development, has been working with NaREC since 2007. Subsequently, Clipper has chosen the North-East for its European manufacturing base in Wallsend.

Initially, the site will provide 60 jobs, but the rush to embrace renewable energies means eventually hundreds, or even thousands, could be employed there.

This will be Ms Fay’s legacy: “We have firmly nailed our colours to the mast of new renewable energies and I think that’s a direction that will bring an industrial revolution of its own.

“Clipper Windpower didn’t come to the North-East on a whim. It could have gone anywhere to build a European base. It chose to come specifically to our region.

“It’s going to create a significant number of jobs on a site somewhere on the north bank of the Tyne. Where once we were building ships, soon we will be building turbines.”

BUT will One North East be around to see those plans come to fruition? The Tories charge that the regional development agencies have been an expensive failure that, despite the billions spent, have had little discernible impact. Certainly, the north-south divide appears to be as wide as it ever was.

Unsurprisingly, Ms Fay disagrees: “Prior to the recession we were certainly narrowing the divide. I think we were at 79 per cent (output per head compared to London) and we got to 81.5 per cent, which is an enormous jump. The recession, clearly, has put a stop to that.

“My view is that the measurement is wrong.

London is always going to skew the national average because it’s such a powerhouse.”

She’s equally dismissive of the claim that the regional development agency is too focused on Newcastle: “There’s a perception that Newcastle gets everything and it’s simply not true.”

As she prepares to step aside, Ms Fay is convinced she leaves the North-East a better place than she found it.

“I’m coming to the end of my term after six years. I’ll go and I’ll be replaced – there’s no issues.

You know when you come in what you’re there to do. You’ve got a job to do, you do it to the best of your ability,” she said.

“And if we get a change of Government? I think any Government, when they look at the facts, will recognise the need for something at a regional level that focuses on regional development.

It may not be called One North East, but I suspect that function will remain.”