Some Early Feedback on the Growing Places Fund

Some early feedback on the Growing Places Fund

October 2012
The Chief Economic Development Officers Society (CEDOS) provides a forum for Heads of Economic Development in upper tier local authorities throughout England. Membership includes county, city and unitary Councils in non-metropolitan areas. The Society carries out research, develops and disseminates best practice, and publishes reports on key issues for economic development policy and practice. Through its collective expertise, it seeks to play its full part in helping to inform and shape national and regional policies and initiatives.

The Association of Directors of Environment, Economy, Planning & Transport (ADEPT) represents local authority Strategic Directors who manage some of the most pressing issues facing the UK today. The expertise of ADEPT members and their vision is fundamental in the handling of issues that affect all our lives. Operating at the strategic tier of local government they are responsible for crucial transport, waste management, environment, planning, energy and economic development issues. ADEPT membership is drawn from all four corners of the United Kingdom.

SOME EARLY FEEDBACK ON THE GROWING PLACES FUND

INTRODUCTION

1. Following discussions at HM Treasury, CEDOS agreed to do what it could to provide some early evidence on the operation of the Growing Places Fund (GPF) in local areas. At a subsequent meeting of the ADEPT Growth & Regeneration Board it was agreed this would be done jointly with ADEPT.

2. In requesting information from our member areas at short notice, we have focused on:

how the existing GPF allocations are being spent;
projected outcomes in terms of employment and unlocking economic growth;
any difficulties encountered e.g. state aid challenges, private sector investors wanting grants not loans, complex legal agreements;
projects in the pipeline that could be implemented if additional GPF is made available.

3. We have been able to gather information relating to a number of Local Enterprise Partnership areas. Partly because of the timescale not all of our members have been able to supply information as yet. However, with the Autumn Statement rapidly approaching, we considered it important to submit what information we had at this early stage. It is important to emphasise that this is ‘work in progress’ and we will continue to gather information and feedback, which we hope will be helpful to Government.

4. We strongly support the Growing Places Fund and the approach of allocating funding to local areas rather than by a time-consuming and resource intensive bidding process. There is no doubt that throughout the country, LEPs supported by their local authorities have moved quickly to set up funds to use their GPF allocations to support projects that unlock economic growth. Equally, there is evidence coming through of LEPs that have projects in the pipeline, which could be ready to go and be implementedin the next 2-3 yearsif additional GPF is made available - see examples below. Not surprisingly with a new scheme, there are also a number of operational issues that have arisen and again we give some examples later in this paper.

EXAMPLES OF THE USE OF GROWING PLACES ALLOCATIONS AND PROJECTED OUTCOMES

5. Buckinghamshire Thames Valley LEP – 5 projects involving £7.3 million of GPF funding are being take forward including a broadband project, support for the regeneration of Aylesbury town centre and a new ‘green corridor’ link road, which will unlock 6 hectares of development land, with end purchasers lined up. The projected outcomes are 2200 direct jobs and a further 1000 indirect jobs.

6. Cornwall & Isles of Scilly LEP – potential projects currently being processed include investment in port facilities and the development of high quality factory and office facilities. The 3 projects that have been identified so far are projected to lever in £13.6 million of private sector investment and result in the creation of 517 direct jobs and 440 indirect[1].

7. Coventry & Warwickshire LEP – In the first round, 3 employment site projects have gone through appraisal and are currently progressing through due diligence. The projected outcomes and value for money are:

Growing Places investment of £8.5million;
total project costs of £93.16million;
private sector leverage of nearly 1:11 (£1 of Growing Places for £11 of private sector investment);
total jobs: 10,362;
total employment land to be developed/unlocked: 435,000 sq. m.

Coventry & Warwickshire LEP – Round 1 focus on development ready high impact projects aligned with LEP 5 year strategy

The Coventry & Warwickshire LEP (CWLEP) launched a call for Round 1 projects in March 2012. The LEP wanted a relatively small number of high impact projects that were development ready, and therefore focused on projects that could start quickly, were asking for a minimum of £1million of Growing Places Funding and £5million total costs, and were aligned with the CWLEP’s 5-year Strategy. Round 1 focused on employment sites, as it was felt that housing developments were being addressed through the HCA ‘Get Britain Building’ scheme.

In the first round, 8 project applications were received requesting a total of £20million of Growing Places funding. An initial appraisal looked at a range of criteria (fit with strategy, deliverability of the project, value for money and leverage, ability to repay investment, etc). 2 projects were rejected at this stage due to the oversubscription, largely because of a weaker fit with the CWLEP’s strategy and because they were asking for a mixture of grant and loan, while the others were only asking for a loan.

Of the 6 projects that proceeded to the second stage of appraisal (due diligence), one was removed from consideration after the project changed significantly (a proposed shift from an office development to a superstore), one pulled out of consideration in Round 1 after they wanted to re-assess the initial stages of their project and re-profile the development schedule, and one failed due diligence because of concerns over their financial standing and business plan.

The 3 remaining projects are still progressing through due diligence, although Heads of Terms are now being developed for one of them.

8. Greater Lincolnshire LEP has split its allocation into two tendering rounds. The first round was for public sector led projects that will unlock private investment. An example is a project that will unlock 267 hectares of development land, provide 121,000 sq. m. of distribution space and capacity for 1,475 new jobs, lever in up to £80million of private sector funding for development costs, unlock an area that will provide 70,000 sq. m. of commercial space with capacity for 2,500 jobs, reclaim 13.5 hectares of brownfield land and at the same timealleviate congestionin one of the county’s principal towns[2].

9. The second tender process is currently open, and will close on 1st November. It is to provide loans of £500,000 to £2 million for public or private sector led projects.

10. New Anglia LEP: GPF projects that have been approved are infrastructure and other projects that have a clear benefit to the local area economy:

King’s Lynn enterprise and innovation centre- a purpose built business centre to accommodate and support new businesses in the town;

East Norwich regeneration project - which will provide road access and bridge points to a site capable of significant housing development to the east of the city;

Ipswich flood defence scheme - to alleviate flood risk in Ipswich and enable additional development opportunities;

Former HL Foods site in North Walsham - to provide infrastructure access to a brownfield site to provide a mixed-use development including 90 new homes;

Haverhill Research Park – to provide infrastructure access to a site to be developed for residential and employment use, with Greater Cambridge-Greater Peterborough LEP to contribute an equivalent amount of GPF.

11. GPF loan approvals for these projects are for £16.9 million towards project costs of £62.6 million. Collectively the projects are projected to lead to the creation of 662 direct jobs and 7456 indirect jobs and to the building of 2832 homes.

New Anglia LEP – Innovation Centre to help kick-start jobs growth in Kings Lynn

The New Anglia LEP is investing £2.5 million into a £5 million purpose-built innovation centre designed to nurture new and growing businesses and be a catalyst for growth in the area. Based in the Nar Ouse Regeneration Area site, the King’s Lynn innovation centre will consist of 2322.6 sq. m. of office, conference and networking facilities, which aims to help to create 420 direct jobs in the local area by 2016.By providing bespoke support, guidance and ongoing assistance, as well as purpose built business accommodation, the centre, which will be developed and operated by the NWES Enterprise Agency, aims to help harness and develop the economy in West Norfolk by helping many new businesses to start up and grow and create many more job opportunitiesin future years.

12. Northamptonshire Enterprise Partnership (NEP): The GPF allocation of £5.9million has been partially allocated and includes twocapital projects, which have already been contracted (see case study below). Three further projects have been approved in principle, subject to agreeing conditions of the contract. These include: a project to assist with the discharge of planning conditions to support substantial new housing and commercial development; a town centre scheme to deliver new housing, retail and car parking provision through supporting construction, site preparation and infrastructure costs; and a detailed feasibility study to inform future improvements to key infrastructure, which will enable development to come forward in the surrounding area which is currently unable to proceed.Further projects are currently being appraised, including a scheme to provide a school extension which will unlock residential developments.

13. Projects that have been contracted or approved in principle for loans totalling just over £4 million are projected to deliver directly or indirectly the creation/safeguarding of 2622 jobs, the creation of 38,720 sq. m. of commercial floorspace and 4,358 dwellings. Private sector investment leverage is expected to be £660.9 million. The standard benchmarks being worked to originate from those issued by English Partnerships from the Green Book and continue to be used by the HCA, covering, for example: cost per job, per dwelling, per sq. m. of commercial floor-space, private sector leverage etc.Northamptonshire County Council is the accountable body.

14. NEP was allocated around £400,000 of revenue funding in addition to its original GPF allocation during March 2012. It was agreed by the NEP Approvals Panel that this be directed towards activities and projects that support the objectives of the Growing Places programme and the priorities of NEP. Two such schemes have been approved in principle, including a project supporting apprenticeships activity and a further project supporting inward investment activity. Both of these schemes are still in the early stages of development and as such further detail will be available in the coming months as the criteria and processes are developed.

Northamptonshire Enterprise Partnership – Proactive role of County Council enables GPF schemes to progress

Two schemes have already been contracted under the Northamptonshire Infrastructure Fund (GPF):

A45/A5 Junction improvements- key infrastructure improvements that will unlock housing development at 2 sites in Daventry, supporting the construction of over 2,000 new homes. Repayment will be made through S106 agreements, with a longstop date in place;

St John’s / Plough Gyratory - infrastructure improvements to ease the traffic flow in Northampton town centre, making access to new and future developments in the area easier. Repayment will be made through S106 agreements, with a longstop date in place.

Northamptonshire County Council had applied for the funding for the schemes and committed to pay it back to the fund within a prescribed period from future funding (primarily s106) generated by the future housing and other development which will be unlocked. Without the Council stepping in and providing this proactive role, and guarantee of repayment and therefore accepting an element of risk, it is very unlikely that these schemes would have progressed. This type of role is especially important where a scheme may be dependent on funding from a number of developments.

15. South East LEP: The first round of the Growing Places Fund approvals[3] are:

Unlocking Business Growth - Priory Quarter, Hastings: A range of enabling works and the construction of employment space for Phase 3 of the Priory Quarter scheme in Hastings;

Unlocking Business Growth - North Queensway, Hastings: New junction and preliminary site infrastructure to facilitate development of a business park on the outskirts of Hastings;

Chelmsford NE Urban Expansion: First phase of improvements to the Boreham interchange which will open up access to an urban expansion to the North East of Chelmsford;

Enterprise West Essex at Harlow: Works to improve access to the two sites designated within the Harlow Enterprise Zone;

North Colchester Connectivity: New Park and Ride facility and dedicated busway to unlock homes and jobs growth;

Parkside Office Village: Initial phase of business space targeting SME's as part of a 17hectare business and R&D park on the University of Essex campus;

Dartford Northern Gateway: Provision of new access to the Business Centre in Dartford and provision of growth in business space;

Dartford Town Centre: Preparation of site in the town centre for development of a new civic centre, retail and residential development, facilitating Station Mound redevelopment;

Ebbsfleet Valley: Road improvements to unlock development on the first phase of Eastern Quarry and enable access to the Station Quarter North development site at Ebbsfleet;

Live Margate: Works to bring vacant homes and subdivided properties back into use as quality family housing - part of the wider Live Margate programme;

Rochester Riverside - Access Road and infrastructure: Construction of access road to facilitate mixed use development.

16. The total GPF investment involved is £37,110,000 and is estimated to lead to an additional 15,551 direct and indirect jobs and 20,059 homes[4]. A further 7 schemes are currently in the process of due diligence under GPF round 2.

17. South East Midlands LEP (SEMLEP): Projects approved in principle to allocate funds, with the due diligence process nearly complete are:

Marston Vale Innovation Park and Wootton Housing – ‘Delivering Advanced Manufacturing and Engineering Excellence’- likely to deliver around 2,000 jobs and 500 homes over 10 years;

Electric Corby – to construct zero energy bill homes with public charging points for electric vehicles;

Kettering Green Energy Park – bringing forward the construction of up to 5,500 new homes east of Kettering supported by a green energy facility and employment park;

Silverstone ‘Access to Jobs’ – delivering the necessary investment in electricity capacity to enable the delivery of the Silverstone Master Plan, which comprises a business park, technology park, education campus and hotel and leisure facilities;

Bedford Western Bypass A6 – A428 - Employment land and major housing site[5].

18. These projects involve £11.85 million of GPF funding and are projected to lead to 7,200 homes and up to 22,000 jobs over the next 10 – 20 years. In addition the SEMLEP Board has decided to allocate £1 million to taking forward the East-West Rail project and £7 million to projects within the LEP Enterprise Zone.

19. Stoke-on-Trent &Staffordshire LEP: Projects supported in the first round of GPFare projected to create between 3,900 and 7,200 jobs for an investment of £7.8million from the fund. This investment will result in an equivalent amount of private sector investment.

Stoke on Trent & Staffordshire LEP: Beacon Business Park, Stafford

The site for the business park is on the eastern edge of Stafford adjoining the University, Technology Park, and Ministry of Defence facility. The applicant is seeking support for the construction of a signalised junction which unlocks 20.23 hectares of employment land in the long term with initial proposals to develop 1.82 hectares. The investment will lead to the creation of 415 jobs initiallyand between 2000 - 2415 jobs overall in the longer term.

The anticipated timetable for the project is:

Construction of new roundabout – January 2013 onwards;
Construction of new 464.5 sq. m.unit for B1 use in 2012;
Construction of 2x 464.5 sq. m.units in 2013;
Construction of 1858 sq. m. unit for B1/B8 use in January 2014.

The investment from the fund is forecast to lever in private sector investment in a ratio of 1:6.67 with the loan due to be repaid in January 2015.

20.Tees Valley Unlimited LEP: There has been significant interest in GPF in the Tees Valley and a number of projects came forward from both the public and private sector through an open call for proposals in January this year. The following are proceeding through due diligence:

Teesside Advanced Manufacturing Park – creation of a 2,600 sq.m. offshore wind validation centre, including managed work space, on a key Enterprise Zone site. The project aims to secure £1.4million of ERDF funding to match against £1.4million of GPF. If successful in securing the necessary funds it is expected that the project will deliver 70 direct jobs and the building works will commence in January 2013;

Belasis Hall Business Park - construction of 1,860 sq.m.of office accommodation to meet future demand on the Business Park, a key strategic Enterprise Zone site in the Tees Valley. It will directly deliver 60 direct jobs and will unlock further economic potential on the site. £2.3million of GPF has been allocated and £1.8million of ERDF has also been applied for to support this project;

South Tees Dockside Road – a feasibility study to investigate the potential to open up significant employment land and improve access to the South Bank Wharf/Tees Valley Enterprise Zone Site for which £0.6 million of GPF has been applied for;

Low Grange Urban Village– to construct an access road and associated infrastructure to open up the site. The project will receive phase 1 funding for the feasibility, planning and design of the access road and associated infrastructure to unlock the development. It is expected that the delivery phase will commence in May 2013 when the remainder of the GPF funds will be released. The project, involving GPF funding of £1.5 million, will help secure over 1300 jobs and 1018 homes on the site;

Central Park– £1.2 million of GPF for depot relocation to help unlock phase 1 of a development which includes 320 houses and secures 200 jobs.

21.Worcestershire LEP: In the first round of the Growing Places Fund, there were 11 expressions of interest, 6 of which were shortlisted. 4 were approved for extended due diligence assessment of which 2 are in the final stages of negotiations. These involve £2 million of GPF loan funding[6] leading to the creation of 14,860 sq.m. of commercial floorspace, 250 new homes and the projected creation of more than 530 direct and indirect jobs. The second round of GPF has started.