IN the first of a series of sector spotlights, M.E.N. Business editor Chris Barry looks at Manchester's accountancy sector.

NEWS this week that BDO Stoy Hayward is joining the gold rush to Manchester's £1.5bn Spinningfields business district speaks volumes about the strength and depth of the accountancy scene in the city.

Simon Oldfield, an accountant and chairman of professional services organisation pro·manchester says:

"The accountancy sector is a hugely important part of the local economy. It employs 18,000 people in the north west and around half of those are based in Greater Manchester.

"Although the Big Four are more high-profile, 85 per cent of people work in small and medium sized firms."

While those `big four' - Deloitte, PricewaterhouseCoopers, Ernst & Young and KPMG - dominate the landscape, the other national firms, such as Grant Thornton, BDO, Baker Tilly, RSM Bentley Jennison, Hacker Young and PKF, all have strong practices in the city. Key local players such as Manchester's Ford Campbell and Beever and Struthers, Stockport-based Hurst, and Bolton's Cowgill Holloway have strong practices, particularly serving the fast-growing entrepreneurial sector.

According to Colin Sinclair, chief executive of MIDAS, the investment agency for Greater Manchester, the strength of the city's accounting sector is a `major selling point' and a big plus for international businesses looking to invest here.

He said: "When we are talking to global banks with a view to them investing in the city, the strength of the existing professional services sector is very, very important."

Malcolm Edge, a MIDAS board member and chairman of KPMG's northern region, says the profession has `come of age' in the last decade.

The Enron crisis in the US was a catalyst for change - requiring new levels of independence between firms and clients.

He says: "Ten years ago, we were an audit firm which had some tax and advisory services. The Enron situation made all firms invest in tax and advisory - and other services now.

"Look at the really big corporate deals of recent years - the £1bn-plus Caudwell sale being a good example: it was done out of Manchester by Manchester professionals. A decade ago I think businesses thought they had to go to London for advice, because they wanted the best. I don't think it is the case any more."

"Manchester is very much a place where professionals recognise they need to be, and that is clearly a good thing," he added.

David McKeith, senior partner of PWC in the north west, says that in the past decade the sector has gained greater recognition from the business community and the public sector.

He says his firm has changed a `huge amount in the last decade - having completed the integration of the last `mega merger' in the sector - that of Price Waterhouse with Coopers & Lybrand.

"We've also broadened our service offerings and our client base, so that more than half our revenues now come from clients that we do not audit." The consensus view from the senior partners is that there is no further room for consolidation among the top tier of firms, but more mergers are expected in the mid-tier firms, as they seek the scale to compete.

All agree that short-term economic issues will prove to be challenging.

David McKeith says: "In the short term, the slowdown in the economy will affect us all."

Simon Allport, head of the Manchester office of Ernst& Young, agrees, but feels the downturn my present some opportunities:

"As confidence has waned, businesses have scaled back aspects of their transaction activity, but in challenging times businesses will be increasingly calling on their accountants for help."

Manchester's rapidly maturing financial services sector means more firms are looking for the best talent, which can be an issue. Both Malcolm Edge and Simon Allport believe it is a concern. Mr Allport says: "The profession must develop a stronger proposition to attract the right talent."

Patrick Loftus, senior partner of Deloitte said: "There is no doubt the sector has come of age and that is largely due to the size of the bigger firms. "If there is to be more consolidation it will take place in the mid-tier and below, not least as it is more common for individual partners to move than before."

Mr Loftus said his firm's offering has changed `dramatically' over the last decade, with new advisory areas such as pensions, debt advisory, and forensic services

Deloitte, which recently awarded all non-partner staff a £1,000 bonus, has seen its Manchester staff rise from 200 a decade a go to 650, which includes 550 professional staff. Mr Loftus expects his practice to double in size by 2013.

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