DD1505 London Works Project extension

Type of decision: 
Director's decision
Code: 
DD1505
Date signed: 
28 April 2016
Decision by: 
Fiona Fletcher-Smith, Executive Director of Development, Enterprise and Environment

Executive summary

This DD seeks approval of the variation of the GLA’s funding agreement with the East London Business Alliance, approved under cover of DD1156 on 21st January 2014, to extend the funding repayment period.

The project will continue to deliver the same outputs via the London Works recruitment agency whose purpose is to support talented low-income, disadvantaged people to find and maintain jobs using their graduate or A-Level leaver skill through mainstream temporary and contract work.
 

Decision

That the Executive Director approves the variation of the GLA’s funding agreement with the East London Business Alliance in relation to its London Works project to change the date for repayment of funding from 31st March 2016 (£50k) and 31st March 2017 (£50K) to 31st March 2018 (£50k) and 31st March 2019 (£50k). 

 

Part 1: Non-confidential facts and advice

Introduction and background

1.1    The London Works agency is the first of its kind in London working to place low income, disadvantaged people in employment with A- level qualifications or with university degrees to ensure maximisation of their skills and qualifications. The business is a wholly owned subsidiary of East London Business Alliance which delivers a number of programmes in education, employment and community development by encouraging and facilitating private and public cooperation. The London Works agency, which competes on a commercial basis, is a not for profit social enterprise.

1.2    The LEP and GLA (under cover of DD1156) agreed to the award of £100k to the East London Business Alliance as a contribution to the set up costs of its project and working capital costs of the agency. The originally approved repayment period was profiled to require repayment of £50,000 by the 31st March 2016 and £50,000 by 31st March 2017. The original GPF application sought to revolve funding to support the ongoing growth and expansion of the business. At the time it was discussed with the project delivery partners that this would not be possible however a review mechanism in the funding agreement was agreed which provided for the repayment requirement to be reconsidered. In January London Works submitted a proposal to the GLA for the repayment of the loan to be written off. This was considered by officers and whilst it was deemed inappropriate in terms of use of public funds to write the loan off, it was agreed that a proposal could be made to the LEP and for GLA approval for delayed repayment, on the basis of the case made. On the 9 of March 2016 the project was approved by the LEP for a new repayment schedule.

1.3    The London Works proposal maintains the principles of the agreement the East London Business Alliance originally signed up to and the principles of the Growing Places Fund, protecting funding for investment in future priorities of the LEP.

1.4    In making every effort to meet contractual targets and establishing itself in its set up phase the London Works project’s focus has been on placing a high volume of candidates into a variety of economic sectors to meet high contractual targets. In order to achieve sustainability, the business now needs to refocus some of its efforts on areas of growth which will support its commercial competitiveness. This means targeting specialist sectors and opportunities where salaries and therefore LW fees are incrementally higher. Engagement of clients in specialist areas takes much longer than more mainstream opportunities (approx. 6 months) and therefore to date LW’s focus has been on easier access opportunities.

1.5    Non-repayment of the funding at this stage will provide for an additional staff member to support the efforts to access more specialist opportunities within the existing employer client base. Access to opportunities in these areas is often more difficult and requires longer negotiations to agree. These more specialist opportunities also reflect a more sustainable option for candidates with more mainstream opportunities currently at higher risk of loss through restructuring as large companies contract out these services.

1.6    The previous objectives were to support low income, disadvantaged people to access employment appropriate to their graduate or A-level skill level and these will be maintained through this extended support to the project. 

1.7    Previous Key Target Outcomes: 

•    1216 adult Londoners receiving support which helps them to find or progress in employment (support/training of at least 14 hours) (KPI) 

•    813 adult Londoners starting or progressing in employment (‘adult Londoners starting or progressing in employment' is aligned to the corporate definition apart from that jobs will not last for 26 weeks at the point of being offered, as the nature of the project is that disadvantaged people are supported to find work through temporary assignments) 

•    At least London Living Wage paid by the Agency to contractors. 

•    Improved awareness of temping as a career option - supporting the reduction of unemployment and skills underutilisation
 

 

Objectives and expected outcomes

2.1 The table below identifies projected outputs during the repayment period 2017/18 to 2018/19:

Output/Outcome

2017/18

2018/19

TOTAL

Candidates into employment

300

440

740

Candidates signed-up/Trained

650

650

1300

Candidates registered

900

900

1800

Candidates in sustained employment 6 months plus

 

592

592

 

Equality comments

3.1     ELBA will ensure equality of opportunity through delivering their project. The organisation has an existing Equalities Policy in place. The London Works project specifically addresses the inequalities of the traditional commercial recruitment agency route to employment, where ethnic minority groups are less likely to be offered a job than white applicants despite being as well or better qualified (Race for Opportunity, February 2012). London Works aims to target support at those groups who also face greater challenges to accessing employment. 

3.2    As part of monitoring for London Works all participants are asked to provide information about gender, ethnicity and disability to ensure the services are both inclusive and meeting the needs of all members of the target community. 

3.3    Helping disadvantaged young people to find a sustainable job relevant to their level of qualification was the ultimate objective of the intervention and therefore the ‘Job Outcome’ target and definition is simple and widely accepted as the main indicator of performance.  Across this definition the project has performance on profile.  Monitoring evidence is collated quarterly against reported outputs. 

 

Other considerations
  1. Risks identified:

 

Risk

Impact

Likelihood

Mitigation

Lower take up of clients and candidates

H

M

Ensuring effective marketing and press strategies are implemented.

Exceeding clients and candidates expectations, ensuring word of mouth recommendations.

Carrying out timely and regular reviews against business plan, adjusting plans accordingly and adhering to turn-off strategy.

Some clients delaying payment or defaulting on fees

H

M

Ensuring that all clients are made aware of LW’s payment terms from the beginning of the working relationship.

 

Keeping close control of credit control issues (ELBA has a good track record in this area.

 

Purchasing adequate insurance to cover such eventualities.

 

Financial comments

5.1    The GLA has provided funding of £50,000 in 2013-14 and £50,000 in 2014-15 to the East London Business Alliance for the London Works Project using Growing Places Fund grant from the Government. The funding agreement that underpins the project includes provision for repayment to the GLA of £50,000 by 31 March 2016 and £50,000 by 31 March 2017. The project experienced trading losses in the first two years of its operations and expects to break even in 2016-17 so is not in a position to repay its funding as set out in the funding agreement. This decision will therefore delay repayment of each £50,000 tranche by two years to reflect forecast cashflows on current growth trends. The financial information supporting this request has been reviewed.

5.2    The Regeneration Team within the Development, Enterprise and Environment Directorate will be responsible for managing the project and ensuring the terms of the revised funding agreement are adhered to.
 

Planned delivery approach and next steps

The London Works project will continue to deliver in line with its original project proposal achieving the same outputs and outcomes. 

A Deed of Variation will be agreed in relation to the DD outlining the next steps.