9:47am Thursday 17th December 2009
By Mike Laycock
BRITAIN’S biggest bank is abandoning a £300 million plan to build a new data centre in York.
HSBC’s decision will cost the city up to 2,000 construction jobs and as many as 200 permanent jobs on the Vangarde site at Monks Cross.
The scrapping of the largest single inward investment in York’s history also blocks the creation by HSBC of a new communications network, which would have benefited other businesses in the city.
The bank said a review had confirmed it could meet its needs with existing facilities in the UK, and through better utilisation of its global data centre network.
“This was not an easy decision, but it is the right decision for our business,” said Ken Harvey, chief technology and services officer.
Now the site’s developers are planning to meet with City of York Council chiefs to explore different ways of developing the land, amid hopes that hundreds more permanent jobs might eventually be created than the 325,000 sq ft data centre would have brought.
Mr Harvey, said that since 2007, HSBC had been investing heavily in its data centre capacity in the UK, and had recently opened a new centre in Hertfordshire, with another in Yorkshire coming on line towards the middle of next year.
“We have determined that we can meet our foreseeable short and medium term European business needs with this expanded capacity, and through better utilisation of our global data centre network,” he said.
“One of the reasons we remain a strong and independent organisation is that we are extremely prudent with our expenditures, driving our businesses to be as efficient as possible. “This was not an easy decision, but it is the right decision for our business.”
Data centres are a critical aspect of a bank’s information technology infrastructure, handling billions of pounds in transactions between individuals, companies, institutions and governments. HSBC has existing major data centres in the UK, Hong Kong, Chicago and Mexico City.
Bill Woolley, City of York Council’s director of city strategy, said: “We are obviously disappointed at HSBC’s decision, but we understand that they have to react to changes in the global finance market.
“I spoke to HSBC yesterday and they stressed how pleased they were with the positive response and support they got from the city throughout the planning process.
“They confirmed that the decision not to go ahead with the development was taken purely for business reasons.
“We will continue to work closely with the developers to find a suitable alternative use for the site – one that contributes to York’s future economic prosperity.”
THE developers for the Vangarde site have pledged to return to the drawing board and start again, following HSBC’s decision.
Richard France, managing director of Oakgate (Monks Cross) Ltd, which owns the 30-acre site, said it was told yesterday afternoon of the bank's decision not to proceed with the proposed data centre. “We are obviously very disappointed, as so much time and effort was put into attracting HSBC to York and then in obtaining planning for the 325,000 sq ft data centre and the consequential number of new jobs it would have created,” he said.
“This is not a reflection on York, but a wider global strategic decision by HSBC and their data needs for the future.”
He said Oakgate staff and senior City of York Council members and officers had worked tirelessly to ensure HSBC’s application went smoothly through the planning process.
“It’s extremely disappointing to the city that after more than a year, it has not come to fruition.
“This, however, is a consequence of the current economic climate in which we live.
“We will now have to return to the drawing board and work closely again with the senior members and officers of the council to ensure that we bring this important site forward for the benefit of York city.”
The Press reported earlier this year how Oakgate had a back-up plan ready, just in case the data centre failed to go ahead, and had lodged separate, detailed planning application for offices to the authority.
Spokeswoman Jennifer Hubbard said then it was a backstop and an alternative to the HSBC scheme.
She said Oakgate’s scheme would involve a range of floorspaces within a “family” of buildings located around a central lake, and would create more permanent jobs than the HSBC project.
COUNCIL and inward investment leaders have told of their bitter disappointment at HSBC’s decision.
They have also spoken of the need to redouble efforts to attract business to York generally, and in particular to the Monks Cross site.
Denise Stuart, chief executive of york-england.com, York’s inward investment board, said: “It’s bitterly disappointing to learn that HSBC won’t be building its data centre in York, and I am in no doubt we need to redouble our efforts to make York the UK’s business destination of choice.
“York is in fierce competition with the whole of the UK and Europe to win jobs for its people and york-england.com is totally dedicated to that cause. It’s more important than ever to work around the clock to bring business to the city and to be constantly striving to create jobs for our local people.
“I know how hard everyone worked to make this happen, and I also know that the people of York had high hopes for the project leading to jobs in construction, technology and services. HSBC’s proposed data centre would have been a great opportunity for the city.”
York council leader Andrew Waller who called the decision “disappointing”, said: “We will be working with the developers to find alternative uses for the land, which is a prestige site.”
He hoped construction jobs would be created through other building schemes in York, such as the new council HQ.
He said the loss of fibre optic infrastructure that HSBC had promised to bring with the data centre would be compensated for by York Data Services’ decision, reported in the summer, to install two fibre links which connect directly to the UK’s national internet hub in London’s Docklands.
This will bring high-speed, reliable internet connection to York Science Park, which will also be supplied to local firms.
The council’s Labour group leader, David Scott, said he was disappointed at the loss of 200 well-paid jobs and the additional benefits such a centre would have brought, such as the prestige. “However, we have to look to the future,” he said, hoping the site might eventually create 2,000 jobs instead of 200.
Tory group leader Ian Gillies said: “I am extremely disappointed that the global financial position has worked against us, but what we should be doing now is being proactive and securing an appropriate development for the site. We should waste no time.”
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