DD2278 Good Growth Fund Round 2 Development Funding

Type of decision: 
Director's decision
Code: 
DD2278
Date signed: 
21 September 2018
Decision by: 
Lucy Owen, Assistant Director, Team London

Executive summary

The Good Growth Fund is an overarching regeneration programme delivered through the London Economic Action Partnership (LEAP). It provides funding, expert regeneration advice, design support and knowledge sharing opportunities to a broad range of public, private and third-sector organisations to support their projects to deliver against three strategic themes: Empowering People, Making Better Places and Growing Prosperity.

Under MD2163, the Mayor delegated approval of detailed funding allocations to the Executive Director of Development, Enterprise and Environment, in consultation with LEAP.

A total of 161 Stage 1 applications were received for Round 2 of the Good Growth Fund programme, with a total ask of £125m. The evaluation process has generated a recommendation for each of these projects – which were endorsed by LEAP Investment Committee on 14 September. This paper provides an overview of the process and seeks approval for expenditure on development funding for a number of projects.

Decision

That the Executive Director of Development, Enterprise and Environment approves:

Expenditure of up to £767,500 to support 15 applicants in the development of their project proposals.

Part 1: Non-confidential facts and advice

Introduction and background

London has available £67.183m Growth Deal funding to create one overarching Good Growth Fund targeting equality, inclusion and citizen-led regeneration. The Good Growth Fund is focused on delivery against three strategic themes: Empowering People, Making Better Places and Growing Prosperity.

The Good Growth Fund prospectus states that in making funding decisions, the way applications map across stated priorities and London’s communities will be assessed, in order to deliver a balanced programme of exemplary projects.

Under MD2163, the Mayor approved up to £6.088m revenue support funding. Good Growth Fund revenue support funding is targeted to build a balanced programme with the specific aim of addressing any gaps observed through open call process. Three categories of support are offered to support the development of a balanced programme:

a) Development Funding - supports the development of projects with design and development costs including feasibility, viability, business planning and commercial/property advice to demonstrate need, improve quality and shape and influence the delivery of targeted outcomes, with a view to submitting a full funding bid down the line.

b) Research and Evidence base - supports a series of research commissions which inform and influence the direction and emphasis of funding calls over the lifetime of the programme.

c) Due Diligence – supports the GLA in undertaking technical assessment of grant funding and loan applications. This includes advice on property, valuation, cost/value for money and sustainability.

Revenue support funding sits alongside other means of support including help from GLA officers within the Regeneration or other GLA teams, support from colleagues external to the GLA, but identified through other networks and consultant time from the Specialist Assistance Team (SAT is a pre-procured panel of 47 consultants and six borough officers, spanning 16 areas of expertise).

Development Funding is allocated either as a result of an assessment of applications though the regular open calls (as in this case) or through a commissioning approach as a result of a review of progress of the fund against its stated objective to deliver a balanced programme of exemplary projects.

A total of £3.658m has been indicatively allocated at a programme level for Development Funding. At Round 1 Stage 1, DD2181 approved allocation of up to £1.040m to support 19 applicants with Development Funding. At Round 1 Stage 2, DD2222 approved a further allocation of £570,000 to support eight projects with Development Funding (of which £20,000 was funded from the National Park City budget and £100,000 from the European Social Fund). As a result, £2.168m of Development Funding is available to support further projects.

For Round 2, the prospectus was slightly adapted. The ‘Drive innovation’ action was retitled ‘Craft a smarter city’, to reflect discussions with LEAP Investment Committee and acknowledge that a diverse range of innovation was happening across most projects. An additional action, ‘Supporting local economies’ was integrated into the prospectus, having secured additional funding from the Mayor’s Strategic Investment Fund.

The Good Growth Fund Round 2 open call resulted in 161 Stage 1 applications with a combined ask of £125m.

The evaluation process for the GGF has two distinct stages: appraisal and moderation.

Appraisal focused on the detail of proposals. It interrogated whether the applicants will be able to deliver high-quality projects and outcomes, and what sort of contribution they make to strategic themes of Empowering People, Making Better Places and Growing Prosperity.

All projects were assessed by two officers with knowledge of the local area and/or topic. Officers assessed projects against agreed criteria: Project Description, Deliverability, Value for Money. They examined whether applicants demonstrated an understanding of the programme’s objectives, target group/place/business sector needs, and the extent to which their proposal meets these needs.

Input from officers across the GLA was also sought, to optimise alignment with Mayoral priorities across policy areas, and to add to the understanding of specific sectors. 11 teams in total contributed to the process.

Moderation focussed on ensuring a balanced programme of investment taking account of Round 1 GGF interventions. The Management team examined the list of projects to understand the range of actions being supported, the range of organisations represented, and to maximise the spread and impact of investment across London.

This process resulted in one of five outcomes: (1) invitation to submit Stage 2 application, (2) recommendation to award Development Funding (3) invited to submit an application in a future round, (4) referred to Crowdfund London and (5) unsuccessful.

A recommended list of 15 projects to be offered Development Funding, with a combined value of £767,500, was generated through this process (see Appendix A).

This paper seeks approval to commit expenditure against the recommended list of projects to receive Development Funding.

A subsequent Director’s Decision will bring forward a recommendation for the project bids to receive funding following Stage 2 evaluation and moderation (see Appendix B).

Objectives and expected outcomes

As stated above the aim of Development Funding is to ensure delivery of a balanced programme – by proactively supporting under represented themes, actions, places or communities.

CAPACITY: Five of the 27 projects that received Development Funding in Round 1, submitted Round 2 applications. Four of these projects (distributed across Outer London) have been recommended to submit to Stage 2 applications. This is a positive early indicator of how Development Funding is helping to build capacity, encourage a wider spread of applications, and develop a high-quality pipeline of projects.

ACTIONS: On the Round 2 Stage 1 recommended Development Funding list, the most common leading action is ‘Deliver community-led regeneration’ with four projects, followed by ‘Back small business’ with three.

PARTNERS: More than half of the applicants on the recommended Development Funding list are organisations other than established public sector partners, including seven from the charity sector, one neighbourhood forum and two limited companies. This aligns with our key objective of working with a wider range of partners and building organisations’ capacity to deliver regeneration projects.

GEOGRAPHY: Seven of the projects on the recommended Development Funding list are in Outer London including one pan-London proposal. Of the eight inner London projects on the list, six are in the top 20 per cent most deprived wards nationally. Across all fifteen projects three are in areas of growth. This demonstrates how Development Funding is helping to broaden the geography of good quality applications while also targeting places of need and growth.

Equality comments

Under section 149 of the Equality Act 2010 (the “Equality Act”), as public authority, the Mayor and the GLA must have due regard to the need to eliminate unlawful discrimination, harassment and victimisation, and to advance equality of opportunity and foster good relations between people who share a protected characteristic and those who do not. Protected characteristics under the Equality Act comprise age, disability, gender re-assignment, pregnancy and maternity, race, religion or belief, sex, sexual orientation, and marriage or civil partnership status (the duty in respect of this last characteristic is to eliminate unlawful discrimination only).

Through the Good Growth Fund programme and the selection of project proposals and development of these, the GLA will require applicants to evaluate the potential impacts regarding protected characteristic groups. Any project must minimise disadvantages to all protected characteristic groups within society.

Those that may share a protected characteristic should be encouraged to fully integrate and therefore project activities within the Good Growth Fund programme should be designed to accommodate and reflect the needs of the existing community and those that will live, work and visit an area. This includes the design for those with physical disabilities and mental health problems and older persons. As a minimum, projects receiving ESF funding are required to monitor and report on the age, disability, sex, and race of beneficiaries, as well as employment status and the following additional background factors that may result in barriers to employment or progression in work: homeless, lone parent, ex-offender, carer, drug or alcohol dependency, low qualifications or basic skills needs.

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

This decision is not expected to have any negative impact on persons with a protected characteristic under the Equality Act.

Other considerations

a) Key risks and issues

• Programme - There is pressure with regards to timescales to get to project delivery by April 2019. Careful programming and resourcing is in place to ensure spend is achievable.
• Project failure – experience of working with a wide-ranging programme of complex capital projects suggests it is likely that some projects will fail to progress to Stage 2. As with the previous round of Good Growth Fund, by over-programming to submit to Stage 2 (total ask of £52m), we ensure we have a good pool of projects to select from in Stage 2, and a list of projects ready to go if there is a fall away post contract.
• Under delivery against annual spend targets – the appraisal process has already included a deliverability assessment by the Regen Programme Team and GLA Finance. Following the public announcement of successful applications, GLA Officers will engage further with applicants to ensure that project milestones and delivery programmes are realistic. Once grant agreements have been signed all projects will be closely monitored by a GLA Project Manager, and projects will be expected to report regularly on risks and issues.
• Underachievement against targets and outcomes – the two-stage application process, and applicants’ engagement with GLA Officers prior to submission, is designed to minimise any potential discrepancies between outputs listed in applicants, grant agreements, and eventually delivered outcomes. An Output and Evaluation handbook will be shared with applicants to ensure that outputs are properly baselined and that definitions are shared at an early stage. GLA Officers will continue to monitor projects during delivery to ensure that agreed outputs are delivered.
• Round 3 - Project development work may not lead to the definition of projects which would succeed in securing support from Round 3 of the Good Growth Fund. Officers will be clear with applicants that provision of development funding does not indicate automatic approval of future bids.

b) Links to Mayoral strategies and priorities

The investment supports the priorities set out in a City for All Londoners and the Mayor’s subsequent statutory and non-statutory strategies based on the principles of ‘good growth’ and investment in London’s future. This includes further developing London’s strengths in innovation by encouraging collaboration across sectors, promoting more productive links between business and academia, providing support for innovation activities, fostering entrepreneurial skills and helping access funding and supporting culture ensuring London continues to thrive as a cultural capital. The recommended development funding allocation will specifically target fairness and equality by proactively supporting under represented themes, actions, places or communities as part of developing a balanced programme of exemplary projects. The Good Growth Fund provides a significant foundation and support for regeneration activities to ensure that all Londoners feel they have a stake in the future design and regeneration of the city.

c) Impact assessments and consultations

The Good Growth Fund prospectus was developed following consultation with LEAP. The assessment process, for all 161 EOIs drew on input from 11 teams across the GLA including Culture, Education and Youth, Health, Diversity and Social Policy, Housing and Land, Team London and Transport, to optimise alignment with Mayoral priorities across policy areas, and to add to the understanding of specific sectors. The process generated a recommendation for each project – which was endorsed by LEAP Investment Committee on 14 September.

Financial comments

Up to £6.088 million of the overall £67.183 million allocated to the Good Growth Fund, approved by MD2163, was earmarked for revenue funding, financed by a capital-revenue swap resourced via the Capital Programme Reserve. Approval of detailed funding allocations is delegated to the Executive Director of Development Enterprise and Environment, in consultation with the LEAP.

From this revenue funding, a total of £3.658m was indicatively allocated at a programme level to support applicants in the development of their project proposals in DD2181. Previous Director Decisions (DD2181 and DD2220) have allocated £1.610 million of funding (of which £0.120m was funded from sources other than the Capital Programme Reserve). Therefore, sufficient funding is available to fund £767,500 of revenue expenditure for Development Funding to support 15 applicants in the development of their project proposals.

The applications for Development Funding are from a range of organisations, including London borough councils, registered charities, community groups and private businesses. Before funding agreements are finalised between the GLA and each of the organisations, checks on the financial position and standing of organisations that are non-public sector bodies will be undertaken. For organisations which are not registered companies or charities, assurances will have to be sought directly from the organisations. Funding agreements will need to ensure only eligible expenditure relating to development support is funded by the GLA.

Activity table

Activity

Timeline

Stage 1 assessment

Aug- Sep 2018

LEAP endorsement of recommendations

14 September 2018

Notify applicants of Development Funding offer

24 September 2018

Commence development support programme

October 2018

Launch second and subsequent bidding rounds at 12-month intervals or more frequently

2019 onwards

Interim programme evaluation

Sept 2019

Programme closure

March 2021

Final programme evaluation

Sept 2021