MD2077 ERDF Funding Agreement for Better Futures Project

ERDF Background

1.1 The Environment team have applied for and been offered European Regional Development Funding (ERDF) to deliver the Better Future (BF) Project, which will aim to support the delivery of mayoral programmes and priorities including:

• the Mayor’s Economic Development Strategy; and

• the Mayor’s London Environment Strategies.

1.2 ERDF is used to tackle regional disparities across Europe. The ERDF supports regional development through actions such as business innovation, support and regeneration.

1.3 The ERDF Programme is overseen by the ERDF Local Management Committee (LMC), chaired by the Mayor of London for the GLA (which acts as agent for Department of Communities and Local Government (DCLG) in this regard). The LMC is responsible for considering and approving the criteria for selecting the projects financed under the programme. The GLA acting through the Mayor of London is responsible for the programme strategy, approving recommendations for awarding funding and chairing the London ERDF LMC. Based within the structures of the GLA which acts on London ERDF matters as agent for DCLG, the European Programmes Management Unit (EPMU) undertakes the overall programme management, project appraisal, payment and monitoring roles, and acts as secretariat for the LMC (again on behalf of DCLG). The following should be noted:

• The GLA is following exactly the same application and contract confirmation procedure that others follow, and EPMU have applied the same selection criteria;

• Although EPMU are situated in the GLA, protocols have been put in place to prevent any conflicts of interest arsing in this regard and DCLG and the European Commission are content that the GLA be awarded funding. ERDF rules allow 'intermediary bodies' (which permits the GLA to act as agent for the DCLG in relation to the London share of ERDF) to manage ERDF funding for a region.

• EPMU systems are subject to audit, including audits by DCLG, which may include a review of an application submitted by the GLA; and

• ERDF 2007-2013 programme has been awarded previously under the London Development Agency.

1.4 The vision for the London ERDF Operational Programme is to: “promote sustainable, environmentally efficient growth, capitalising on London’s innovation and knowledge resources with a focus on promoting social inclusion through extending economic opportunities to communities, in areas where this is most needed”.

1.5 The BF project is in line with, “Priority Axis 4: Supporting the Shift Towards a Low Carbon Economy in All Sectors”.

1.6 Since the EU referendum central Government has guaranteed ERDF funding for the next three years. In addition a final funding call was announced in December 2016 which has also been guaranteed by central Government.

GLA Bid Proposal - Better Future

1.7 Current growth rates indicate that the low-carbon and environmental sector in London will be £40bn by 2020 and £53bn in 2025, creating 40,000 new jobs. In 2014/15 the sector comprised Sales: £30.4bn; Employment 192,416; Companies 10,900 with an annual growth rate of 6% ref: London’s Low Carbon Market snapshot 2015.

1.8 The Mayor of London has a number of manifesto commitments and priorities that support the growth of the low carbon sector in London:

• Commit London to an ambitious target of becoming a zero carbon city by 2050;

• Establish a tech talent pipeline and develop a city wide STEM strategy; and

• Work in partnership with industry to deliver skills, infrastructure and growth.

1.9 This reflects the raft of legislation, policy and environmental targets set by the GLA and national government as well as the drive to decarbonise the global economy. These targets are often not attached to distinct pathways and technologies, which leaves a great deal of flexibility and scope for entrepreneurs to develop new products, services and ideas which can be used to meet them.

1.10 The Mayor of London has already set a series of ambitious targets for the capital, for carbon reduction, delivering decentralised energy, improving energy efficiency, reducing emissions from transport and tightening waste targets. The carbon reduction target is a major ambition (and a real challenge). Consistent with that the Old Oak Park Royal Development Corporation (OPDC) is looking to drive forward the low carbon agenda as part of its overarching strategic direction as will be set out in its local plan and will create the market place for low carbon technologies and services that Innovative Low Carbon Enterprises (ILCEs) can take advantage of.

Delivery Partners

1.11 The Delivery Partners were selected based on their experience and track record, ability to deliver the required activities and the fit of their match funding and future plans. All Delivery Partners have confirmed their match funding or are in the process of confirming their match funding to the project which includes delivery, staff time and other committed revenue expenditure. Delivery Partners are:

 GLA

 The Old Oak Park Royal Development Corporation (OPDC)

 Sustainable Bridges (SB)

 Imperial College London (IC)

 Imperial Consultants (ICON)

 Haringey Council as a Strategic Partner to explore opportunities and links to their Built Environment Innovation hub

1.12 Grant funding agreements or Service Level Agreements will be put in place between the GLA as Lead Partner and all Delivery Partners detailing roles and responsibilities, outputs and governance of the provision of funding and projects prior to project commencement.

2.1 The Better Future objectives directly respond to the investment priorities of London’s European Structural Investment Fund (ESIF) strategy (which ERDF is part of) and the specific requirements of the Low Carbon call – 4f promoting research and innovation in, and adoption of, low carbon technologies by increasing the number of firms in the low carbon sector who are innovation active and to increase the adoption of new low carbon technologies in the capital. The project aims to stimulate innovation in London’s ILCEs providing both physical and direct support to help them innovate and bring new ideas to market; delivering growth for their business and jobs for London. It will provide:

• Resident ILCE support, which includes both the physical incubation spaces and tailored technical and business development support; and

• Non-resident ILCE support, which provides technical and business development support only.

The project will focus on addressing the following market failure:

• The poor success rate of ILCEs achieving business growth and innovation through investment and sales.

2.2 Project success will be judged against delivering technically viable and carbon saving technologies with high growth potential. In addition the project will assess the efficacy of co-locating ILCEs at an incubation hub with ‘on-tap’ access to technical and business development support, compared to distributed ILCEs with scheduled access to technical and business development support. This and the data on the cost base for such support will be used to develop a sustainable business model for how London can best support low-carbon ILCEs into the early stages of business growth and provide the blueprint for a further hub at the OPDC location in the future or other suitable locations in London e.g. London Borough of Haringey.

2.3 Our delivery model provides a unique approach to fostering innovation – building on peer to peer support through co-location in a single space coupled with access to industry leading support organisations to help drive ideas through the technology development curve. At the heart of our methodology is our approach to partnership working, bringing the best combination of organisations together to create a unique offering for London’s ILCEs. This approach has led us to create the following key elements:

2.4 The most significant impediment to the development of the low-carbon sector in London occurs when young, innovative low-carbon enterprises try to grow (Green Means Business, London Sustainable Development Commission, 2014 http://www.londonsdc.org/documents/LSDC_GreenMeansBusiness.pdf). This failure in the low-carbon innovation pipeline means that London’s growth rate in the sector is 6% compared to a global growth rate of 11%. Ref: https://newclimateeconomy.report/The NewClimateEconomyReport.pdf



2.5 Based on the Better futures Partners experience we are proposing a system of support for new innovative low-carbon enterprises to help overcome the barriers to growth. The Better Futures project aims to stimulate technological innovation in London’s SMEs by providing managed co-working space and tailored innovation support. Innovative low carbon enterprises will be supported by leading industry and research partners to develop new innovations and bring them to market, delivering growth for their business and jobs for London.

2.6 The Better Futures project will provide managed co-working space and tailored innovation support to improve the success rate and speed of new low-carbon enterprises seeking to achieve growth. The project will bring Delivery Partners’ extensive technical and business expertise to help low-carbon enterprises to optimise prototypes for the market and develop their business for growth investment. The project will work intensively with 50 enterprises, delivering CO2 reductions and job growth. The experience of running the hub will be used to develop a scaled, sustainable model for such hubs as a key component of developing a Cleantech Cluster in London.

2.7 The following table details each element of the delivery journey, who will be responsible for delivery and how it will result in the desired outcomes:

3.1 Due to systemic barriers that some groups face, SMEs do not always realise their full potential. In terms of targeting high growth potential SMEs, the project will seek to engage and support:

• Black, Asian and Minority Ethnic (BAME), women and disabled groups who own and run low carbon sector businesses or have the potential to develop innovations to support that market.

• BAME, women and disabled groups who may not view themselves within the sectorial focus of the project but with support could develop new low carbon innovations.

3.2 London SMEs are more likely than larger companies to be owned by women, BAME or disabled people and to this extent the project will therefore support equality and diversity. The project shall monitor equality performance throughout the project to see if there is more that the project can do to reach women, BAME or disabled owned SMEs.

3.3 The project shall work with relevant business organisations to attract referrals to the project for example the Asian Business Association, the Prince’s Initiative for Mature Enterprise and Business in the Community. We will actively monitor the volume of applicants from minority groups and if they are underrepresented, look to proactively drive participation through specific engagement techniques such as ‘women in innovation’ workshops or working with 3rd sector organisations to find and target suitable companies.



3.4 There is some evidence that the low carbon sector is giving rise to employment opportunities that are far less gender biased e.g. supply chain coordinators, quality assessors. The delivery activities will be planned to account for working patterns of both men and women, arranging events at a range of times to enable carers and people with school age children to attend.



3.5 As part of the outcome capture for this project, we will monitor the equality mix of new jobs created by the beneficiary companies and actively promote success stories from equality group SMEs who develop and introduce new products and services to the market.

3.6 Additionally, the project will be marketed to a diverse range of entrepreneurs and early start Cleantech SMEs through established networks, press and social media. It will specifically target and engage women Cleantech entrepreneurs, where there is clear under-representation in those that go onto form start-ups. This will be done through the provision of support and advocacy from successful female role models in the sector.

3.7 In order to prevent discrimination of protected characteristics, the Delivery Partners will:

• Ensure that selection and assessment of innovation SMEs, applicants and sub-contractors is non-discriminatory on the grounds of the ‘Protected Characteristics’ of the applicants.

• Work to ensure business support is open and accessible to all by removing barriers to participation whenever encountered.

• Encourage feedback from participants on equality of opportunity in terms of access and participation in competition events and business advice sessions: difficulties encountered will be addressed as a priority and appropriate adjustments made.

• Make all promotional information available in accessible formats when requested.

3.8 As part of the support offered to SMEs in market readiness and accessing innovation procurement opportunities we will promote the importance of adhering to equal opportunities legislation, reinforcing the message that this will not only result in social benefits but considerably improve their chances of securing commercial supply chain opportunities, for example highlighting the advantages of gender balanced boards. We will also highlight the benefits of diversifying and to attracting a more diverse market for their products or services e.g. developing products and services to alleviate fuel poverty.

a) Key risks and issues

The GLA as lead partner is ultimately responsible for the ownership and management of risks within the project, however, the partnership as a whole has a shared approach to risk identification and is clear where ownership of risks and issues lie between them.

During the project development phase of this project, the team have identified key risks and issues relating to the project and these will be updated as the project moves into the delivery phase.

A detailed risks and issues log will be held by the project team and during delivery, monthly meetings will be held to identify and understand the risks to project set up and ongoing delivery. Together, the team will quantify the risk probability, impact and mitigation strategy. A risk will either not materialise due to the mitigation actions or other factors and can be closed, or, if the risk is realised it is moved to the issues log where the impact of the risk occurring is managed. High impact risks will be escalated and discussed at Programme management board level.

The following table details the key risks currently identified by the project team:-

b) Links to strategies and Mayoral and corporate priorities

Delivery of this project will contribute to improving the quality of life for Londoners.

The BF project is linked to the delivery of the Mayor’s:

i. London Environment Strategy which will look to develop demand and market opportunities for the low carbon and resource efficient businesses

ii. Economic Development Strategy which will look to develop support programmes to grow the low carbon, resource efficient business sector

iii. Equalities Framework

iv. Sustainable Development Policy

The project also helps to contribute to various mayoral manifesto commitments including:

• Establish a tech talent pipeline and develop a city wide STEM strategy

• Diversification of London’s economic base including manufacturing

• Commit London to an ambitious target of becoming a zero carbon city by 2050;

• Work in partnership with industry to deliver skills, infrastructure and growth to achieve economic fairness and inclusion

c) Impact assessments and consultations.

• The project was reviewed and approved under the ERDF Round 2 application stages by GLA and EMPU officers using the Local Management Committee (LMC)-agreed assessment framework, moderated by a Project Selection Committee aimed at ensuring objectivity in the appraisal process.

• The project will be overseen by an Advisory Group, made up of Strategic Partners including GLA, OPDC, Imperial College and other expects. Please see Section 8.2 of the attached Full ERDF Application document (page 55) for further information on the Strategic Partners and Advisory Group.

5.1 Approval is being sought for expenditure of up to £1,647,044 to establish the creation of the Better Future Project. The European Regional Development Fund will fund 50% of the costs £823,522. The remaining 50% match funding will be £206,194 from the GLA and £617,328 from project partners.

5.2 It is proposed that the Better Future Project will be profiled across 3 years and funded as follows:

5.4 The GLA match funding of £206,194 comprises of £149,954 for staff costs, £15,000 for events and marketing activities and £41,240 for indirect overhead costs (which do not have to be evidenced), the costs will be funded from the Environment Budget & the Regeneration Delivery team.

6.1 Sections 1 to 5 of this report indicate that:

The decisions requested of the Mayor concern the exercise of the GLA’s general powers, falling within the GLA’s statutory powers to do such things considered to further or which are facilitative of, conductive or incidental to the promotion of economic development and wealth creation, social development or the promotion of the improvement of the environment in Greater London; and in formulating the proposals in respect of which a decision is sought officers have complied with the GLA’s related statutory duties to:

• Pay due regard to the principle that there should be equality of opportunity for all people;

• Consider how the proposals will promote the improvement of health of persons, health inequalities between persons and to contribute towards the achievement of sustainable development in the United Kingdom; and

• Consult with appropriate bodies.

6.2 In taking the decisions requested, the Mayor must have due regard to the Public Sector Equality Duty; namely the need to eliminate discrimination, harassment, victimisation and any other conduct prohibited by the Equality Act 2010, and to advance equality of opportunity between persons who share a relevant protected characteristic (race, disability, gender, age, sexual orientation, relation or belief, pregnancy and maternity and gender reassignment) and persons who do not share it and foster good relations between persons who share a relevant protected characteristic and persons who do not share it (section 149 of the Equality Act 2010). To this end, the Mayor should have particular regard to Section 3 (above) of this report.

6.3 The Mayor may, under section 38 of the Greater London Authority Act 1999, delegate the exercise of the GLA’s functions to the Executive Director of Development, Economy and Environment.

6.4 Section 1 above indicates that the contribution of £1,647,044 amounts to the provision of grant funding and not payment for services. Officers must ensure that the funding is distributed fairly, transparently, in accordance with the GLA’s Equalities Framework and in a manner which affords value for money in accordance with the Contracts and Funding Code.