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LEP Digital Creative, Science and Technology Working Group Date of meeting: 27 January 2016 Title of report: Growing Places Fund allocation – Round 3 To be presented by: Debbie Jackson, Assistant Director, Regeneration Cleared by: Fiona Fletcher-Smith, Executive Director-Development, Enterprise & Environment Classification: Public (with reserved appendices) 1 Executive Summary 1.1 The Growing Places Fund (GPF) received 11 applications in Round 3 requesting a total investment of £16.4m capital. The applications have been evaluated and moderated. Four projects are being recommended for endorsement through round 3, which seek a total investment of £4.65m. This paper seeks LEP Digital Creative, Science & Technology Working Group (DCST WG) endorsement for two of these projects relevant to the Group’s priorities, which seek a total investment of £2.95m capital, to be funded from the £7.5m available. 2 Recommendations 2.1 It is recommended that the Group: 2.1.1 Endorse the proposals recommended by officers at Appendix 3; 2.1.2 Note that two other projects are being recommended for endorsement and are being considered by the LEP SME Working Group on 2 February 2016; 2.1.3 Endorse the proposal from officers that six projects will be informed their proposals have not been successful, as detailed at Appendix 4; 2.1.4 Note that the bid received from the LLDC was rejected through an early decision process at the December 2015 LEP meeting and that the bidder has been informed of the outcome; 2.1.5 Note that £4.80m of capital GPF funding will remain unallocated; this is a combination of the £2.85m remaining from the Round 3 pot and the £1.95m returned to the pot from the Custom House project who withdrew their proposal in late October 2015; and 2.1.6 Note that three of the proposed rejected projects have a strong alignment with LEP objectives but fell short of the requirements in some areas, and that these projects may be considered at a future stage of round 3 or a separate competitive round in the event the issues can be addressed. 3 Introduction and Background 3.1 On 10 September 2015 the third round of the Growing Places Fund (GPF) launched, through which £7.5m capital funding was available. The round closed to applicants on 21 October 2015. 3.2 11 bids were received seeking a total investment of £16.4m capital (Section 4.2). This included a post deadline bid which Officers recognised had very strong alignment with the LEP priorities relating to supporting science related small businesses; the bid was therefore accepted in line with the Round 3 prospectus which stated that in exceptional circumstances we would accept bids outside of the timeframe advertised in the prospectus. 3.3 The majority of bids were private sector led, which aligns well with the aim of the GPF fund (to use public sector funding to encourage private sector investment). All ten priority areas set out in the LEP’s London 2036: An Agenda for jobs and growth report were addressed, with many bids focusing on: training more technical talent; increasing the focus on emerging markets; securing long-term infrastructure investment; and helping London stay open for business. In addition, the prospectus also included a wider set of parameters around SMEs than what is identified in London 2036. 3.4 The focus of bids submitted in Round 3 ranged widely, from those seeking to create workspace for SMEs across a range of sectors (including science, technology, arts, culture and design) to those looking to support the growth of investment funds for social SMEs. 3.5 Bids were evaluated in November 2015 in line with the criteria in Appendix 1, which included a process of clarification questions, and moderated in December 2015. 3.6 In December 2015 an early decision was made on the bid received from the London Legacy Development Corporation (LLDC), who were informed that their proposal was not successful. Officers noted that whilst this was a strong bid in terms of strategic fit and deliverability, it failed to offer any additional outputs (when compared to the Round 2 proposal GPF already funds). This was viewed to be a fundamental issue with the bid as consequently supporting this bid would reduce the value for money of the GLA’s current investment. An early decision was taken because the project is time sensitive; in particular the project reaches a pivotal point in March 2016 when they need to award the station contract to meet the allocated rail possession window they have in Easter 2017. This meant a quick answer on the outcome of their GPF Round 3 bid would help inform the conversations they needed to have with other stakeholders about where the investment can come from to bridge the £5.34m shortfall before project reaches March 2016 (instead of finding out about the outcome of Round 3 in February 2016). 4 Issues for consideration 4.1 The Group is asked to endorse and approve two bids identified by officers as aligning strongly with the Group’s priorities, identified and detailed at Appendix 3. An overview of Round 3 bids can be found in the table at Appendix 2, with additional information provided for bids relevant to the LEP DCST WG and recommended for rejection from round 3 at Appendix 4. 5 Equality comments 5.1 The GLA Regeneration Team work with delivery partners to target investments in places with the greatest potential to secure inclusive jobs and growth opportunities, and ensure all investments promote equality and work to deliver new and secure existing diverse and inclusive opportunities and services. The GPF application process invited bidders to demonstrate how they give due regard to the requirements of the Public Sector Equality Duty Act. This is reinforced by the requirements set out in the funding agreement of any successful project. 6 Risks arising / mitigation 6.1 Risks at a programme level include State Aid issues and working with non-borough organisations. Initial advice has been received on these issues, and they will be investigated further on individual projects with applicants prior to entering into funding agreements. 6.2 Risks associated with individual projects have been identified as part of the bidders’ applications, and the overall GLA evaluation process considered risk and deliverability when prioritising projects. Individual loans will be monitored through the GLA’s Budget and Performance Review process. 7 Financial comments of the Executive Director Resources 7.1 The recommended projects can be funded from the headroom of unallocated GPF budget. Bidders will need to be subject to due diligence checks. Funding would be provided as a loan to the first bid identified at Appendix 3 and terms will need to be agreed for repayment and the rate of interest to be applied. Further work is required to ensure that the project costs of the second bid at Appendix 3 can be fully funded as capital expenditure together with confirmation of the project funding package and agreement of repayment terms. As the funding will be repayable the security for this in the event of non-repayment will also need to be agreed for both projects. 8 Next steps 8.1 The next steps following consideration by the Panel/Group are summarised below: Activity Timeline LEP SME Working Group 2 February 2016 LEP paper submitted (through urgency procures) 3 February 2016 Publically announce LEP endorsement of Round Mid-February 2016 3 projects Investment and Performance Board (IPB) 16 February 2016 Round 3 programme approval sought Director Decision for Round 3 programme sought Early March 2016 IPB and director decision approval sought for March – July 2016 individual projects Funding Agreements signed April – August 2016 Appendices: Appendix 1 – GPF round 3 evaluation criteria and scoring framework Appendix 2 – Overview of bids received (reserved from publication) Appendix 3 – Round 3 project information sheets for preferred bidders (reserved from publication) Appendix 4 – Round 3 project information sheets for recommended reject bidders (reserved from publication) Additional Information: The following documents are available upon request: Growing Places Fund Round 3 prospectus (lep.london/gpf_r3) Scoresheets for individual projects, including detailed evaluator comments Project proposals and responses to evaluators clarification questions