IF Webinar Chaired by Edward Goodchild
Edward Goodchild took the chair for Intelligence Forums’ webinar on 15 October 2020, with almost thirty members from across the country.
Our first speaker was Charlotte Adams, Commercial Manager - Mine Energy, at the Coal Authority (CA) a hydrogeologist with an interest in water resource assessment and mine water treatment. She has worked in both the renewable energy industry and the academic world, having spent at 11 years at Durham University before joining CA two years ago.
CA owns the majority the UK’s coalmining assets (which were nationalised after World War II) and is responsibile for managing the liabilities that derive from such mines and the effects of past coal mining. Charlotte showed us, however, that this legacy is becoming an asset. CA estimates that 45 per cent of the country’s energy use and 32 per cent of its emissions is accounted for by heating, so to meet the UK’s net zero carbon emissions target the UK must slash the use of fossil fuels. While we have decarbonised the UK’s electricity supply we currently rely on natural gas for about 70 per cent of our heat demand. Abandoned mines have huge potential to decarbonise heat demand, and Charlotte’s role is to develop this potential for homes, businesses and Local Authorities across the UK.
There are 23,000 abandoned coal mines in the UK with 25% of homes and businesses (some 9m buildings) and most of its cities outside London sitting on former coalfields. Geothermal energy (from the earth’s core) is a deeper source of heat compared to ground source heat (sun heating the earth), and typically, temperatures range between 10° and 20°C, but can reach as much as 40°C (in a mine of 1.2 km deep). Conveniently, an estimated 2Bn cubic metres of water runs through the warrens of galleries in disused mines, is heated by geothermal energy and when pumped to the surface, and circulated through a series of heat exchangers has the potential to release sufficient energy to heat as many as 180m homes. The carbon footprint of this technology is a fraction of that from burning fossil fuels, and the technology used is relatively straightforward. It has the significant advantage too, that the temperature of the mine water remains constant all year round.
Charlotte stressed the importance of ensuring that the heat in the mine water is not degraded, and to do this CA designs the circuit so that the returned water has travelled the longest possible route back to the point at which it is extracted. CA’s modelling is so sophisticated that it is sometimes possible to have both the return and extraction boreholes relatively close together while still achieving a very long underground pathway between the two.
She describedCA’s work withDurham County Council to develop a Garden Village at Seaham. The proposed development will consist of 750 affordable homes, 750 private homes, a school, shops, and medical and innovation centres and will be adjacent to CA’s Dawdon mine water treatment scheme. Dawdon can provide a continuous supply of water at 18°C to 20°C with a potential 6MW of low cost, low carbon sustainable energy available for local space heating all year round. There are75 also similar heat transfer projects around the country, which don’t need to end with housing – they could also be used to heat horticultural and leisure projects. CA is also exploring the extraction of heat from data centres, water treatment and sewage plants to reheat the ground water before returning it the ground.
Our second speaker was Rhys David, CEO and founder of Credas Technologies (“Credas”), which manufactures smart ID verification software to enable a business to quickly on-board and verify an individual’s identity, accurately and affordably.
Rhys has more than 20 years’ experience in technology and innovation gained in the UK defence, aerospace and oil and gas industries, latterly as an executive at GoCompare. He set out the three pillars of his management philosophy which guided him during his time as a CTO:
creating a culture that empowered the People working in the company
embedding Process in the DNA of the business; and
devising the appropriate Technology. The technological response must depend on the nature of the problem being solved, he said and sometimes it was better to start with a blank sheet of paper.
A successful combination of these three provided, he said, a competitive advantage. He told us that since becoming a CEO, the imperative of financial performance has widened his focus, and he has added a fourth pillar, that of Execution, to his management philosophy.
Credas was born from a conversation with a friend in a recruitment company about the requirement to establish a candidate’s identity and right to work. At the time, the recruiter was spending up to 180 hours a week carrying out such validation. So Rhys set about developing a biometric program which he combined with some existing technologies to solve the problem, and went on to establish a business which focussed on identity verification projects.
Further opportunity arose in connection with the UK’s Anti-Money Laundering regulations (AML) regulations. These are enforced by bodies which range from FCA/PRA, the SRA (Solicitors Regulation Authority), OFT, ICAEW (Chartered Accountants), RICS to HMRC, etc., and key to the legislation is identity verification. AML Enforcement has recently extended to the art world, and galleries are now required to comply with the legislation.
Three and a half years ago Rhys recognised that compliance with AML created increased pressure on Estate Agents, Lawyers and Accountants and the risk of significant fines if they were in breach. The potential to reduce this regulatory risk led to the Credas’ core product, which is now the most widely used software in the estate agent sector. Its offering has since been expanded to include products which ensure compliance with legislation covering AML Audits, Know your Customer (KYC), Right to Work, Modern Slavery and Ultimate Beneficial Ownership.
He told us that COVID has increased demand for Credas products. Pre-pandemic, many businesses would have simply used face-to-face verification but now they need to be able to carry out remote ID verification. Without the Credas software they would simply have had to cease trading.
He now employs a team of about 20 staff who carry out between 600,000 and 1 million checks per month and with growth in the business of over 900% p.a. Rhys, surely, has a quality problem!
Our third speaker was Stewart Miller Interim Chief Technology Officer of Innovate UK (“IUK”), the UK's innovation agency, which works with people, companies and partner organisations to find and drive the science and technology innovations that will grow the UK economy.
Based in Swindon with a staff of around 250 staff, drawn mainly from a business background, IUK is part of the Government’s, UK Research and Innovation (UKRI), which brings together IUK, Research England and the 7 Research Councils. With a combined budget of more than £6 billion, UKRI is an executive non-departmental public body, sponsored by the Department for Business, Energy & Industrial Strategy.
IUK’s role is to:
determine which science and technology developments will drive future economic growth
meet UK innovators with great ideas in the fields that it is focused on
fund the strongest opportunities
connect innovators with the right partners they need to succeed
help innovators launch, build and grow successful businesses
Since 2007 it has invested over £1.5 billion, matched by a further £1.5 billion in partner and business funding, which has helped more than 5,000 innovative companies in projects estimated to add £7.5 billion to the UK economy and create 35,000 extra new jobs.
Stewart Miller has worked in the aerospace industry all of his career and is an experienced industry leader with a reputation for leading business transformation both for recovery and growth. At the age of 15 yrs. he watched a TV program in the Horizon series named “Chips with Everything” and as a result decided that he would embark on a career of technology design. After sixteen years designing technology for Tornadoes, Harriers and Typhoons etc., he recognised that defence budget cuts were the writing on the wall for the UK jet aircraft industry, and took a degree in Business Administration. This catapulted him into a career of engineering management rather than design.
During his 20 years with Leonardo S.p.A., an Italian multinational company specialising in aerospace, defence and security he became interested in getting new ideas turned into products, building a reputation for leading transformations and starting new ventures. Ultimately, he put together a business case to management for moving Leonardo’s R&D into the 21st-century. His proposal was accepted and the transformation under his stewardship, began.
Stewart’s role is to help stimulate new businesses. Often start-up’s or existing businesses will bring their own ideas forward to IUK, sometimes IUK issues challenges to industry. IUK is most likely to invest where the idea meets societal requirements or government policy generally. So, for example, COVID related projects or those related to climate change are more likely to be funded than innovation in areas such as social media. After all there is always capital available in the commercial markets for good projects.
IUK functions as a sort of “catapult”. It is a catalyst which marries ideas and funding (which can be from both industry and IUK), and launches products and businesses. Stewart is responsible for all such catapults, and the provision of support through the life cycles of the products funded.
Early on in the pandemic additional funding was made available to IUK to allocate to COVID related projects. One of these was The Ventilator Challenge, whereby IUK issued a challenge to UK industry to design, develop and manufacture ventilators to supplement the NHS’s existing stock.
This resulted in the formation of VentilatorChallengeUK, a consortium of UK aerospace, motorsport, automotive and medical businesses. This came together to meet the challenge by scaling up production of an existing device (Smiths) which was tried and tested, and to similarly mobilise around a ventilator concept from Penlon which modified existing proven clinical equipment. The consortium eventually produced a total of almost 1400 devices within 12 weeks. Such a success, he said, is an example of how COVID, like other crises, has been a catalyst to sweep away bureaucracy, and support innovation.
He told us that IUK is currently receiving between 80 and 100 ideas each month from industry in COVID related areas such as
Manufacture and design of PPE
Improved Track and Trace systems
Auto recognition of those entering pubs etc.
and that the ideas change as the nature of the crisis changes.
He believes that the Government will continue to provide additional funding beyond COVID partly due to “levelling up” and partly because after I Jan 2021, certain constraints imposed by the EU will be removed. The amount of funding provided by the Government in this space is however very small in comparison to other countries.
He said that IUK would likely overlap with the government’s proposed new “blue skies” science research agency, to be modelled on the Advanced Research Projects Agency (ARPA) in the US., to fund high-risk, high reward science” as part of a series of pro-business measures designed to boost Britain’s competitive edge.
Given that ARPA is the brainchild of Boris Johnson’s closest political adviser, Dominic Cummings, it is likely to go ahead!
Our final speaker was Richard Hunter, Head of Markets at interactive investor, a flat-fee online investment platform with £30 billion of assets under administration. Richard has over 30 years of stock market experience and is one of the UK’s foremost commentators on market matters who has previously held senior positions at Hargreaves Lansdown and NatWest Stockbrokers
He told us that there are no obvious precedents for lockdowns and its consequences, with the closest being the Spanish flu of 100 years ago, which makes it difficult to put this year into context.
While 2020 has seen record falls on the stock market there have also been record gains across global markets, and most losses have been recovered. Added to this, oil prices have fallen to the lowest level in 16 years, oil futures priced negative in April, and a record level of monetary stimulus and fiscal measures has been implemented over a 6 month period.
All this has been against the extraordinarily volatile backdrop of the China / US trade disagreement and various other global tensions, all compounded by the US presidential elections. Only six weeks ago the possibility of a Biden win was dismissed, but this now seems like a probability. While Biden will raise taxes further fiscal stimulus is still a post-election commitment, and there is a growing realisation that unemployment will rise, which will lead to Trump being ousted.
The YTD response of the various US stock market indices has been as below:
Dow Jones: A fall of 0.2% - reacting as if there had been no COVID.
S&P: a rise of 7%; and
NASDAQ: a rise of 31% - explained by the number of tech stocks that it comprises, and the fact that during COVID “silver surfers” have had to come to terms with the use of technology for socialising, shopping and entertainment
However, in the UK the FTSE has declined by 23% over the year- why? Because:
fiscal stimulus provided by the various government initiatives such as furlough will run out soon
UK unemployment will inevitably rise.
consumer demand, a large driver of UK economic activity, will likely as a result be significantly depressed
a large component of the FTSE is oil and banking, and bank profits are under pressure. Interest rates across the globe are historically low, indications are that Q3 earnings for US banks will be poor, and expectations are that UK banks will need to increase their bad debt provisions, none of which is endearing to investors.
FTSE companies tend to be more mature and cyclical. Slow to react, many have had to make 5 years of digital changes in the past 5 months.
uncertainty surrounds the outcome of the UK’s negotiations with the EU.
Unsurprisingly international investors find the UK “too difficult” and are more likely to go elsewhere for “fear of missing out” on opportunities such as the US tech boom.
When questioned on the outlook for the UK property market, Richard said that this would vary by regions. There are different drivers in London, the SE, the north and the SW, and a different outlook for each of the residential and a commercial sectors.
It is unclear, he said whether demand for office space will ever return to pre- COVID levels. Additional space is still being built out, so there is likely to be overcapacity in city commercial properties. However there remains a housing shortage, and the government continues to help first-time buyers onto the property ladder, so there is still demand for residential properties.