MD1596 London Regeneration Fund

Type of decision: 
Mayoral decision
Code: 
MD1596
Date signed: 
19 January 2016
Decision by: 
Boris Johnson MP (past staff), Mayor of London

Executive summary

The London Regeneration Fund (LRF) uses the Growth Deal 2 allocation of £20m capital from April 2016, to deliver jobs and growth through a competitive programme to encourage London’s High Streets and Places of Work to become more thriving and diverse. 

The LRF received 69 applications requesting a total of £58.6m. The applications have been appraised and moderated, and reviewed by a Task & Finish Group including Mayoral Advisors and LEP SME working group members. 

A programme of 24 projects totalling £19.44m is recommended for approval subject to funding and contract. The remainder is intended to fund pledges to small projects through further rounds of the Mayor’s crowdfunding initiative.

 

 

Decision

The Mayor:
i)    approves expenditure of up to £19,440,000 capital funding as a contribution to the proposed recipients’ costs of the projects listed in Appendix 1, made in response to the London Regeneration Fund prospectus, subject to confirmation of funding from Government;
ii)    delegates to the Executive Director – Development Enterprise & Environment authority  to agree the final amount of individual grant awards as a result of detailed project development, providing the programme remains in line with that set out in this paper and providing the overall award remains within the funding envelope;
iii)    approves in principle the two projects it is proposed be held in reserve and to be taken forward only if funding becomes available within the £19,440,000 total; and
iv)    delegates to the Executive Director – Development, Enterprise & Environment authority to approve  expenditure of up to a further £560,000 capital, for further rounds of pledges through the Mayor’s crowdfunding pilot programme

 

 

Part 1: Non-confidential facts and advice

Introduction and background

1.1.    The LEP’s London Regeneration Fund uses the Government’s Growth Deal 2 allocation of £20m capital funding to deliver jobs and growth through a competitive programme to encourage London’s High Streets and Places of Work to become more thriving and diverse, available from April 2016. 

1.2.    The LRF prospectus  was launched on 30th July 2015. The objective of the fund is to help places in London make the most of the opportunities presented by economic and demographic change and new technology.  This will help secure the future of London’s mixed economy. Funding is available to boroughs, Business Improvement Districts (BIDs), traders’ associations, and workspace providers. Given the funding constraints bidders were only able to bid for capital funding but were encouraged to align to this revenue through their match funding.  Bidders were invited to take advantage of guidance and support in developing their bids. The aim was to attract high quality bids that could quickly move to delivery.

1.3.    69 funding applications were received by the deadline of 2nd October 2015 with a £58.6m total request. A cross departmental team of officers evaluated and moderated the applications in accordance with the prospectus themes and criteria including deliverability and value for money. 

1.4.    Applications were generally of a very high standard and responded well to the prospectus priorities.  There was a particularly strong response to the Places of Work priority, reflective of the current pressure on affordable workspace in London. Overall, there were potentially 55 projects with a total request of £39.9m that would be worthy of support if further funding was available. This demonstrates a strong pipeline for future investment in High Streets and Places of Work.

1.5.    On occasion, targeted reduction to project budgets and re-scoping was proposed by officers to ensure all projects were as efficient as possible. Elements of applications that were not delivering on objectives or value for money were removed. This resulted in an overall reduction of 17% from original funding requests, and meant more projects could be funded. This approach has been taken previously with the GLA’s High Street Fund with no issues, but the detail will still need to be agreed with recipients as grants are prepared.

1.6.    The projects were ranked in order of their moderated evaluation scores, based on the published prospectus criteria and methodology, with the highest scoring allocated funding within the £19.44m available. Projects with comparable scores falling either side of the funding cut-off point were considered further by the LRF Task & Finish Group, which included LEP SME Working Group members and Mayoral Advisors, in line with published criteria, in order to arrive at the programme of 24 projects, with 2 held in reserve. The LEP SME Working Group, LEP (02/12/2015), and IPB (10/12/2015) support the proposals illustrated in the appendix. 

1.7.    Projects held in reserve will be taken forward with applicants, but will only be funded if funding becomes available from other projects, for whatever reason.

1.8.    £19.44m is available through this round. The remainder will fund pledges to small projects through further rounds of the Mayor’s crowdfunding pilot programme (following previous rounds approved in DD1399).

1.9.    An indicative profile based on the applications of the programme of 24 projects is £11.3m in 16/17 and £8.1m in 17/18. The precise figures will change as grant agreements are developed.

 

Objectives and expected outcomes

2.1.    The LRF prospectus sets out the following objectives:
-    Encourage proactive stewardship - to bring about successful long-term change in the way high streets and places of work look and function
-    Enable good growth – by encouraging the delivery of high quality mixed-use developments in town centres
-    Pilot change – by harnessing advances in technology to develop genuinely new models for high streets and workspace. 
-    Secure and create open workspace – in sectors and places that lack appropriate supply
-    Intensify Places of Work – through innovative projects to create the capacity for places of work to sustain a greater intensity of uses and increase productivity.

2.2.    The programme outputs will be refined as grant agreements are prepared, and as a result may be subject to revision up or down. If applications are to be taken at face value, the proposed LRF programme would deliver the following:

Public realm improved

28,625 m2

Buildings or shopfronts improved

68

Town Teams / BIDs established

3

Jobs created

2,963

Businesses supported

1,986

Internships / apprenticeships

73

Commercial space created

59,779 m2

 

2.3 The proposed LRF programme can also be summarised as below:

Project Type

No. of projects

LRF request

 

Avg. request

 

Total Match

High Street

1

£800,000

 

£800,000

 

£1,295,798

High Street and Workspace

7

£6,171,495

 

£881,642

 

£11,442,893

Workspace

16

£12,468,505

 

£779,282

 

£17,661,472

             

Lead Applicant Type

No. of projects

LRF request

 

Avg. request

 

Total Match

Borough

12

£12,483,760

 

£1,040,313

 

£18,373,063

Other

12

£6,956,240

 

£579,687

 

£12,027,100

             

Total Programme

24

£19,440,000

     

£30,400,163

 

2.4.    Officers will work with the proposed funding recipients to refine the details of the identified programme of projects further as grant agreements are developed, before any award of funding is confirmed (in April 2016). As is standard practice this will include work to consider and mitigate (where applicable) any state aid and other legal risks and best delivery routes to minimise VAT costs where recipients are unable to reclaim VAT. Financial due diligence will also be carried out on non-borough delivery organisations. Opportunities to improve projects and align with wider GLA objectives will include offering advice from the Environment Team and the RE:FIT programme. 

 

 

Equality comments

3.1.    All projects will promote equality and work to deliver new and secure existing diverse and inclusive opportunities and services. The projects will be developed and delivered in compliance with relevant Codes of Practice and in line with the requirements of the public sector equality duty to ensure that the following issues have been considered: 

i)    Physical design proposals:  All physical design proposals will be assessed in terms of accessibility to ensure we minimise disadvantages suffered by people who share a protected characteristic. age, disability, gender reassignment, pregnancy and maternity, race, gender, religion or belief, sexual orientation
ii)    Documents and publications: any documents produced will comply with Mayor of London branding guidelines, it being based on guidance from the Royal National Institute of Blind People. Where possible accessible formats will be available.
iii)    Events and Workspaces: all events and workspaces will be open to all and, where possible, we will encourage people who share a protected characteristic to participate in activity and use in which their participation is disproportionately low.

3.2.    The boroughs receiving funding will already share the public sector equality duty. This will be stipulated in grant agreement to ensure delegation is clear.  Non Borough organisations won’t automatically be under this duty but will be required to meet these requirements through grant agreements, and provided with guidance to ensure they meet them. 

 

Other considerations

4.1.    Risks at a programme level include the provision of unacceptable state aid, 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. Alternative delivery routes or re-scoping may be required for some projects, although there is generally a low risk of this. Two projects are held in reserve should any funding become available as a result of any re-scoping associated with entering into grant agreements.  

4.2.    Risks associated with individual projects have been identified as part of applications, and the evaluation criteria considers risk and deliverability when prioritising projects. Individual grants will be monitored through the GLA’s Budget and Performance Review process. 

4.3.    The LRF programme is in line with Mayoral Strategies and LEP Priorities set out in Action for High Streets and the Economic Development Strategy.

4.4.    The LRF prospectus was developed following consultation with the LEP SME working group, the Open Workspace Providers Group, Business Improvement Districts, and London Boroughs, through LEP engagement events and High Street Network events. A number of teams within the GLA have been involved in the appraisal and moderation of applications to the LRF, including Economics, Culture, Economic Business Policy Unit, Environment, Transport, Housing & Land, and Planning.

 

Financial comments

5.1    The Government has notified an indicative Growth Deal grant funding profile covering the period 2016-17 to 2020-21. This is capital grant funding and includes £20 million for the London Regeneration Fund expenditure proposed in this decision. However, the date of the formal grant determination has not been confirmed at this stage and therefore no project funding commitments should be entered into until this is received, in particular if any conditions are placed on this funding or whether grant for years beyond 2016-17 remains indicative and subject to future revision. The programme of projects will need to be managed within the total grant made available in individual years for the Growth Deal allocation which includes the FE Capital and Digital Skills programmes.

5.2    Funding for applicants will be subject to further due diligence as necessary, including on financial capacity, match funding, VAT and to ensure that only capital expenditure is funded.

 

Investment and Performance Board

7.1.    IPB approved this decision in principle at its meeting of the 10th December 2015, but emphasised the need for the MD to be ‘subject to confirmation of funding from Government’. IPB asked for publication of projects to be reserved until the launch. IPB wish to ensure that Local Authority Section 151 officers would sign off match funding, and that GLA officers request evidence of the outcomes being delivered by non-borough projects and reserve GLA/LEP funding if match funding is not delivered.  

 

 

Planned delivery approach and next steps

8.1 The next steps following Mayoral Decision are summarised below:

Activity

Timeline

Announcement

January 2016

Grant Agreements prepared, and project details finalised (see 2.4)

Jan-Mar 2016

Delivery Start Date

April 2016

Delivery End Date

March 2018

Project Closure with Evaluation

March 2019

 

Appendices and supporting papers

Appendix - Proposed LRF Projects