DD2022 Further Education (FE) Capital Investment Fund

Type of decision: 
Director's decision
Code: 
DD2022
Date signed: 
11 July 2016
Decision by: 
Fiona Fletcher-Smith, Executive Director of Development, Enterprise and Environment

Executive summary

This paper sets out and requests approval, by way of delegated authority (MD1420), additional expenditure of £61,082 for the East London Advanced Technology and Training (ELATT) project from Round 1 of the FE Capital Investment Fund bringing the total grant award of FE Capital funding to £147,962, for a total, project value of £443,887. The project provided additional information which changed the amount of funding they were able to apply for. The increase in funding will allow for an upgrade in scope with regards to accessibility and upgraded windows. 

The additional costs are a result of 1) clearer costs certainty from an updated Quantity Surveyor report 2) additional accessibility improvements to the college and 3) new windows to improve the projects BREEAM score, following our FE Capital technical advisors recommendations. 
 

Decision

That the  Executive Director approves:

1. Additional expenditure of  up to a maximum of £61,082 of grant funding on the East London Advanced Technology and Training project for the purpose of  capital expenditure resulting in a total FE Capital grant expenditure of up to a maximum of £147,692, noting the initial funding of up to £86,880 was approved under DD1368.
 

Part 1: Non-confidential facts and advice

Introduction and background

1.1    The London Enterprise Panel (LEP) was awarded £55m in 2015/16, £65m for 2016/17 from Growth Deal 1 and a further indicative £38m from 2017/18 as part of Growth Deal 2 for capital investment in Further Education colleges and providers. 

1.2    Previous approval
The East London Advanced Technology and Training (ELATT) project has previously been approved under DD1368 for £86,880. Since this approval the project has become unviable for the reasons set out below. 

1.3    Additional information
Additional information provided by the college changed the state aid position they had previously held. This enabled the project to upgrade the scope of the project’s environmental outputs which could be funded by the GLA. 

1.4    Accessibility
The College carried out an additional audit on their Stage 2 access proposal (a ramp). This report was completed by NRAC Access Consultants. They advised that the colleges Stage 1 plan for access to the main entrance via a lift would be a preferred option for wheelchair users, those with pushchairs and people carrying heavy loads.  These updates ensure that the facility is fully accessible are now included in the recommended project. 

1.5    Replacement of windows
Following an eco-audit carried out by London Sustainability Exchange a key recommendation was to install double glazed windows across the front elevation at the same time as the wider works. This will provide improved energy use and reduced carbon footprint. Other benefits include being able to keep the building generally warmer (positive impact on retention, engagement and achievement rates of students) and estimated savings of £453 per year. 

1.6    BREEAM 
It was also highlighted that additional funding to improve the windows of the building would have a significant and positive impact on the project’s BREEAM score due to improved energy saving abilities.  It was recommended by GLA consultants that the following amendments would improve the BREAAM scoring of the project. New double-glazed windows will reduce energy consumption. There will be further cost savings from the reduced requirement for air conditioning.

1.7    Updated costs from Quantity Surveyor 
Following this the college revisited the approved project and completed a second Quantity Surveyor report which gave further cost certainty and have increased the scope to provide full accessibility to the college and new windows. These scope changes have undergone technical due diligence and have been reviewed by the FE Capital Investment Programme assessment panel who consider them to contribute to the aims of the project.

1.8    Cost Breakdown
These changes impact upon the overall costs and grant sought by the project as detailed below:
 

 

Application

Approved via DD 1368

Revised Grant for approval through this DD

Variance

Build Costs

£447,513

£237,588

£420,834

£183,246

Equipment Costs

£58,961

£23,053

£23,053

£0

Overall Costs

£506,474

£260,641

£443,887

£183,246

FE Capital Grant Sought

£168,825

£86,880

£147,962

£61,082

The main changes are replacement of windows and external doors (£54,000), lift and conveyor installation (£41,000) and associated costs of preliminaries (£36,000) and professional fees (£24,000).

1.9     Equipment Costs
These have remained as per Stage 2 application due to there being no significant change in the rationalization of space.

1.10    Uplift in outputs 
The project outputs are higher than expected for the additional funding requested. This has been tested with the college whom have confirmed that they are able to meet the outputs if traineeships may be counted in addition to apprenticeships.

1.11    Due diligence
These scope changes have undergone technical due diligence and have been reviewed by the FE Capital Investment Programme assessment panel who consider them to contribute to the aims of the project.
1.12    Evaluation 
The proposal has been evaluated by a team of GLA officers at both Expression of Interest and Detailed Application stages. Each bid has a score out of 100 based on a weighted score of 5 against the following criteria (weighting in brackets):
        a) Strategic fit with LEP priorities (30%)
        b) Benefits (30%)
        c) Value for money (20%)
        d) Affordability and Deliverability (20%)
The updated proposal for additional funding to be applied to this project was made to the FE Capital Steering Group, LEP and IPB in February 2016 who endorsed the recommendations.
1.13    Funding
There is residual funding from the FE Capital Round 1 2015/16 funding allocation to cover this increase.

 

Objectives and expected outcomes

2.1    The London Enterprise Panel’s Growth Deal for London established a comprehensive request to HM     Government to invest in the Further Education (FE) estate in London. 

2.2    The Prospectus, launched in November 2014, invited applications to deliver against the LEP’s Jobs     and Growth Plan priorities as well as the following priorities and objectives specific to the FE Capital     Investment Fund:
a. Renewal, rationalisation and modernisation of the FE estate
b. Creation of space which is versatile fit for purpose, transformational and tolerant to change 
    c. Proposals that help to meet the ambitions of the Mayor’s Smart London Plan or which support LEP priority areas 
d. Proposals focused on progression to the highest levels of vocational study    
e. Proposals that demonstrate collaboration with schools, other education providers and employers

2.3    The approximate primary outcomes delivered by the investment are summarised below, table below quantifies the outputs in the five financial years following completion of the projects.
 

Table 1

Output/Outcome

EoI Application

Approved project (Detailed Application)

Revised Grant Request

Variance to EoI

Variance to Detailed App

No. of learners supported 

640

750

1156

516

406

Cost savings (£)

 £24,414

 £32,220

 £34,230

 £9,816

 £2,010

Learners into employment

310

237

367

57

130

No. of Apprenticeship starts

165

182

225

60

43

No. of NEETs into employment

265

218

473

208

255

No. of LLDDs supported

35

89

142

107

53

Increase in the number of students in local priority training sectors

265

107

238

-27

131

Numbers of businesses supported

100

105

156

56

51

NB. ‘Jobs created’ refers to all jobs created including construction jobs and progression from education to employment.

Equality comments

3.1    The FE Capital Investment Fund will support FE colleges and providers to invest in improving their estate that has poor accessibility.

3.2    Through the FE Capital programme and the selection of project proposals and development of these, the GLA requires all applicants to evaluate the potential impacts with regard to protected characteristic groups.  In particular applicants are required to demonstrate inclusive design of new and refurbished FE estate funded through projects and College’s Equality and Diversity Policies are submitted within the application.

3.3    As a condition of funding agreements, projects awarded funding will be required to meet the Public Sector Equality Duty and demonstrate this through reporting of progress.

3.4    The LEP and the Authority are aware of their responsibilities under the Public Sector Equality Duty as set out in Section 149 of the Equality Act 2010, compliance of which will be formalised in Grant Agreements with individual projects.

3.5    The GLA Diversity and Social Policy team has reviewed all projects at the detailed application stage, which has been tested through the due diligence process as necessary.
 

Other considerations

a)    key risks

4.1    Funding required to deliver preferred projects exceeds that available. In order to mitigate the risk that the FE Capital Fund is unable to fund all preferred projects, a two stage approval process has been developed. Projects have been required to submit detailed applications to test costs, deliverability and to undertake detailed due diligence, tested by independent consultants where appropriate. Any queries resulting from due diligence have been raised with the projects and a resolution or mitigation has been provided. Officers have analysed match funding proposals and the college’s financial health to ensure that funding is available or can be obtained. Furthermore, appropriate break clauses are included in all Funding Agreements and Deeds of Variation to allow for the eventuality that certain projects are unable to obtain the required match funding. 

4.2    Projects are not deliverable. The Detailed Application has been scored on the basis of detailed information on deliverability and affordability, including assessment by independent due diligence consultants. Any queries resulting from due diligence have been raised with the projects and a resolution or mitigation has been provided. In addition, the procured Independent Monitoring Surveyor services will provide appropriate assurance that the requirements of project specific funding agreements are met with regards to build time, cost, and quality before projects may drawdown funds.

4.3    Proposed do not deliver full outputs. All bids have been assessed against this criterion initially at the Expression of Interest and furthermore for robustness of the output and outcome data at the Detailed Application Stage, including understanding the implications of SFA budget cuts from projects. However, there is a risk of further cuts to future budgets which may have implications on the outputs/outcomes that the project can deliver further. To mitigate this, the bidder was asked to present plans that are flexible and tolerant to change, which are assessed by internal evaluators and specialist consultants.

b)    links to Mayoral strategies and priorities

4.4    Applications received have been assessed on their alignment to the Mayor’s Smart London Plan, Economic Development Strategy and links to the London Plan.

4.5    In addition, applications have been assessed on the ability to meet the ambitions of the LEP Jobs and Growth Plan in the following criterion;
• skills and employment: to ensure that Londoners have the skills to compete for and sustain   London’s jobs;
• micro, small and medium sized enterprises: to support and grow London’s businesses;
• digital creative, science and technology: for the capital to be recognised globally as a world leading hub for science, technology and innovation – creating new jobs and growth; and
• Infrastructure: to keep London moving and functioning.

c)    Impact assessments and consultations.

4.6    The Area Review for London, led by the Mayor working with government, will commence on 29th February with sub regional reviews for West and Central starting in March and South and North East in May.  The purpose of AR is to develop and deliver a more resilient, high quality and stable post-16 Skills and education landscape in London focused on meeting business and local social and economic needs. The AR will focus primarily on General Further Education and Sixth Form Colleges however other post-16 providers including Adult and Community Learning and Specialist Designated Institutions can opt in. Applications to the FE Capital Investment Fund that have been formalised by Grant Agreement at the time of the AR will be taken into account in the AR considerations.   
 

Financial comments

5.1    DD1368 approved an initial capital grant award of £86,880 for the East London Advanced Technology Training project as part of the first round FE Capital Investment Fund. Due to the reasons noted above the project become unviable with this level of funding and therefore additional funding of £61,082 is required, which will bring the maximum grant award for this project up to the value of £147,962, for which there is sufficient headroom within the FE Capital Round 1 funding allocation to cover the additional grant award.

5.2    As per DD1368, match funding will need to be provided in order to make all the FE Capital projects viable and in this case the match funding required will be £295,925. The match funding will need to be confirmed as part of the funding agreement and in the event that this is not confirmed or made available, the funding agreement will include the appropriate break clauses. Expenditure will be incurred over a number of years and the aggregate indicative profile of this will also need to be confirmed once funding agreements are finalised. 

5.3    Any changes to this proposal, including budgetary implications will be subject to further approval via the Authority’s decision-making process. All appropriate budget adjustments will be made.
 

Investment and Performance Board

7.1    The GLA will enter into grant agreement with the FE Capital provider for this project. The project will be required to monitor and report their progress on a monthly and quarterly basis and will be required to complete an evaluation at following completion.

Activity

Timeline

Enter funding agreement

June 2016

Announcement

June 2016

Delivery commences

June 2016

Construction completion and Formal opening

Sept 2016