DD2634 Royal Docks Good Growth Fund – Compressor House Project with the Really Local Group

1.1.    The Royal Docks is one of London’s most distinctive economic locations and one of its largest regeneration projects, with the potential to generate 35,000 additional jobs and 4,000 new homes within the Enterprise Zone (EZ). The Mayor of London and the Mayor of Newham are jointly leading the regeneration of the area through its EZ status, which is funded through the ringfencing of business-rate income collected within the EZ. The EZ is projected to deliver over 7m square feet of commercial space, primarily at three key development sites: Royal Albert Dock, Silvertown and Albert Island.

1.2.    The London Economic Action Partnership (LEAP) Board endorsed the Royal Docks EZ Delivery Plan in June 2018. The Mayor approved (under cover of MD2338) expenditure of up to £212.5m for the Royal Docks EZ Delivery Plan to deliver an integrated and catalytic package of transport infrastructure, connectivity, economic development, placemaking, estate management and creative programming projects that will deliver the cohesive transformation of the Royal Docks and accelerate the delivery of EZ commercial space.

1.3.    The economic purpose of the area is outlined in the Royal Docks Economic Purpose Report, jointly commissioned by the London Borough of Newham (LBN) and the Royal Docks team (RDT) in 2019. The report stated: 

“Over the next two decades, the Royal Docks will become established as a nationally significant hub of enterprise, employment and culture. It will be recognised as a testbed for environmental, social, and technological innovation. It will be globally fluent and internationally focussed, harnessing the benefits of Newham’s diverse community.” 

1.4.    The Economy strategic objective within the Royal Docks EZ Delivery Plan aims to invest in and deliver projects across four overarching programmes of Good Growth; Employment and Skills; Business Support; and Workspace. The request for expenditure of £563,408 capital, the subject of this decision, will come out of the Economy budget approved under cover of MD2338. The expenditure would pay for certain elements of the capital costs associated with the transformation of Compressor House into a space for cultural events and workspace. 

Royal Docks Good Growth Fund
1.5.    Within the endorsed Royal Dock EZ Delivery Plan, the GGF was allocated £13m capital funding. The GGF is one of the key platforms through which the EZ can be transformational for Newham and for London as a whole, helping to secure the economic critical mass that is key to establishing an enhanced economic identity and function of the area. The fund emphasises the importance of social, urban and environmental innovation; and supports local economic development priorities, alongside continuing to promote good growth.

1.6.    The GGF provides a platform for EZ public investment to be agile and targeted. This allows the EZ to be more responsive to current challenges, highlighted in the adopted Economic Purpose Report, and to prevailing and emergency priorities. It will also help to build capacity, within the local community, to play a more active and participatory role in the evolution of the area, as well as being explicit about the need for all projects to deliver on Newham’s priority of Community Wealth Building (CWB). CWB is Newham Council’s flagship policy position which seeks to embed an inclusive economy to address poverty and ensure that all incoming investment benefits all the borough’s residents.

1.7.    To date, two GGF projects have received funding: the Factory Project, to a value of £2.85m (grant and repayable grant) in late 2020; and the RDCS, part of the University of East London, to a value of £1.6m (grant and repayable grant), approved in late 2022. The Factory Project build was completed in summer 2022 and has already shown itself to be an extremely important part of the growing economic landscape of the Royal Docks. The RDCS, due to open later in 2023, was announced alongside other sustainability-related workstreams from the team and the wider Royal Docks area.

The Project
1.8.    The RDT used the GGF as a vehicle to secure interest and, ultimately, a partner/tenant for an opportunity at Compressor House, a freehold property owned by GLA Land and Property Ltd. The process involved informing 150+ selected potential partners of this opportunity via email and social media. Nine expressions of interest were received in early 2022, which were whittled down initially to four shortlisted partners, and finally to a single preferred partner. The culmination of this process was the receipt of a full GGF application from the Really Local Group (RLG). It was assessed against, and in line with, established GGF criteria and processes, and presented to the Royal Docks EZ Programme Board on 16 March 2023. The application was considered by the EZ Board and approved for funding.

1.9.    The RLG is an established provider of event space and affordable workspace across London and the South East. Ambitions are for Compressor House to be the centrepiece of a wider transformation of the surrounding Albert Dock. It will act as a community hub, capable of holding a wide range of activations and hosting events – including exhibitions (digital and physical) and performances. This work will cater to the local community and to visitors, from both across the UK (including London) and abroad.

1.10.    The business plan that has been developed by RLG includes the RDT taking desk space on market/commercial terms for the regenerated building ; delivery of a digital inclusion programme digital inclusion (as part of both LUF and GGF)(the site becoming a Newham Sparks centre  – subject to additional funding); and an agreed shared ambition for a joint programme of events and activities that align with the ambitions of the RDT’s cultural placemaking strategy.

1.11.    It is also planned that the Royal Docks model will be permanently showcased at Compressor House. The bespoke model measures appx.8m in length and shows how the Royal Docks will evolve in the coming decades. The model’s presence makes Compressor House a central hub for the regeneration of the Royal Docks – a place for community engagement and professional convening, collaboration and celebration. The model is currently temporarily on display at the Guildhall as part of New London Architecture’s presence there but it is important to bring the model back to the Royal Docks to support the teams marketing and engagement with local stakeholders. 

1.12.    The project will be secured through a 10-year lease for the RLG, with options to extend beyond this. A separate decision will be taken to the Mayor of behalf of GLAP that will set out the terms of, and seeking consent to, this disposal. Reflecting as it does a pivotal heritage asset with a prime location, it is felt a successful project at Compressor House can give impetus to the surrounding neighbourhood, bringing new activity and identity to the area. Early discussion with the new owners of Royal Albert Dock Phase 1 buildings indicate that further activation of the surrounding area would be of benefit. There are also ambitions for the surrounding land to be used to directly grow the scope and impact of Compressor House (again, to help – not hinder – the wider ambitions for Royal Albert Dock).

1.13.    MD2982 approved the receipt of the identified £1.725m Levelling Up Fund, as well as the in-principle letting of Compressor House for the same ends and on the same terms as outlined here.

The Good Growth Fund Application
1.14.    The GGF application has been assessed by three independent assessors from the RDT.
Applications were assessed against the three core GGF criteria of Project Description; Deliverability; and Value for Money. In addition to Good Growth, the cross-cutting themes of CWB and Transformation/Innovation are of material relevance. The moderated assessment is summarised below:
•    Project Description: Overall, this is considered to be a very suitable GGF project that aligns with the strategic ambitions of the Royal Docks. The application meets the fund GGF objectives; as well as the Royal Docks cross-cutting themes of CWB, transformation/innovation. The applicant has demonstrated an understanding of the context of the long-term placemaking strategy for the area, and how this opportunity fits into this. They have identified wider opportunities and local needs and will engage with local communities and stakeholders to carry out the project. The project does not conflict with any priorities/projects in the Royal Docks programme. Addressing digital illiteracy by building accessible digital infrastructure is a primary theme area, although numerous are addressed.
•    Deliverability: The identified milestones in the application are considered to be realistic. The main capital grant from LBN (£1.725m) is pending the securing of the £563,408 (capital) match contribution. In addition to the £1.725m, the applicant has provided a match fund of £0.275m (revenue) for programming, with a further £1m+ considered unsecured (relates in part to project performance). There are considered to be sensible approaches made to mitigate risk. Overall the project is considered to be deliverable.
•    Value for money: Overall, this is considered good value for money. It appears there will be good allocation of resources to achieve the outputs and outcomes required of the GGF and LUF grant requirements. The applicant makes a good case for the GGF as part of a long-term investment to level up the Royal Docks.
1.15.    A few points required additional information, specifically in relation to: whether the delivery timelines are realistic; unsecured match funding; a five-year projection, starting in 2023, which would be needed at the point of financial due diligence; and the accessibility of the community spaces. These issues have now been clarified.

1.16.    Overall, the assessment is positive about the application. It is felt the project has the potential to transform the area. The level of detail provided gave the assessment team confidence about the applicant’s credentials.
 

2.1.    The fund will be used to support Compressor House becoming a community hub with a café/bar. The hireable space will be capable of holding a wide range of activations and hosting events – including exhibitions (digital and physical) and performances. This work will cater to both the local community and visitors. It will also become a home for the RDT – including the Royal Docks model – and a natural home for the evolution of the area.

2.2.    A range of outputs are associated with this project. They include requirements linked to the Levelling Up Fund (LUF) portion of the funding; the GGF is providing match funding that unlocks this significant capital contribution. Over 10 years, the project (RLG via grant agreement) commits to the following:

•    7,100 square feet of heritage asset brought back into use
•    one full-time equivalent, permanent job created directly through the project
•    250 square metres of new ‘other’ commercial space created
•    500 young people engaged in positive skills development and/or wellbeing activities
•    12 new employment opportunities (direct)
•    20 new employment opportunities supported (indirect)
•    three new businesses supported (direct)
•    footfall of 10,000 people via visitors to, and users of, Compressor House
•    40 events.

2.3.    Many of these indicators are considered significantly below what is expected for a 10-year lease/programme. For example, it is expected that there may be close to 40 events per annum rather than per decade once the operation is established. It is anticipated that the project – led by RLG – will exceed these minimum identified outputs.

3.1.    Under section 149 of the Equality Act 2010, as a public authority, the GLA must have due regard of the need to:
•    eliminate unlawful discrimination, harassment and victimisation
•    advance equality of opportunity
•    foster good relations between people who share a relevant protected characteristic and those who do not. 

3.2.    Protected characteristics under section 149 of Equality Act are age, disability, gender reassignment, pregnancy and maternity, race, religion or belief, sex, sexual orientation, and marriage or civil partnership status.

3.3.    The implications of this proposal have been assessed against the Equality Duty, and it is considered that will have a positive impact. Specifically, the Digital Inclusion aspects of the wider project will ensure that Compressor House becomes a means to improving community access to digital skills, equipment and culture. All those with protected characteristics are expected to benefit, especially both older and younger populations who are likely to be major beneficiaries through schools-specific activities and efforts to target older populations (those for whom digital literacy is typically more prevalent). As the digital inclusion programme will target the local diverse communities, the project beneficiaries are likely to be diverse in race and religion/belief. The unofficial characteristic of socio-economic status (often grouped under ‘class’) may also be a defining feature of beneficiaries where efforts to bring digital connectivity help those who hitherto may have been unable to afford access.

3.4.    Further, the cultural programme associated with the space will be steered with RDT involvement, and its focus will include local cultural programming. A key driver is to widen access to culture in the area. In the case of Compressor House, this may well focus on digital cultural activity. These imperatives are embedded within the LUF and GGF commitments and agreements.

3.5.    No adverse implications for any group sharing a protected characteristic have been identified during this process.

3.6.    The Royal Docks EZ Delivery Plan projects are aimed at implementing several of the Mayor’s policies (such as the London Plan, the Healthy Streets Approach, the Culture Strategy, the London Housing Strategy and the Transport Strategy). It is also aligned with the Mayor’s Equalities Framework to consider the requirements of relevant equalities groups.

3.7.    The London Borough of Newham’s CWB strategy ensures that growth in the borough: 
•    is shared locally and held democratically
•    builds on internal strengths and opportunities
•    realises the potential of Newham’s community, residents, businesses and voluntary sector.

3.8.    The applicant and the RDT are jointly committed to ensuring equality of access to opportunities (i.e. workspace and cultural activity) through this project. This is in line with the ethos of CWB, which is an explicit core theme of the GGF and, more broadly, the EZ programme.

3.9.    The RDT developed a CWB Pledge – a voluntary commitment aimed at organisations to help them embrace the principles of CWB. This pledge has subsequently been taken on by Newham Council, and is now managed by them. All GGF recipients are required to be accredited CWB ‘partners’. The RLG has committed to becoming accredited through the GGF application process.
 

Declarations of Interest

4.1.    There are no known conflicts of interest to declare for those involved in the drafting or clearance of the Director’s Decision. 

Risks Arising/Mitigation

Mayor Strategies and Priorities

4.2.    This programme will also help deliver the following Mayoral policies and strategies:

•    the Mayor’s Skills for Londoners Strategy
•    the Mayor’s Equality, Diversity and Inclusion Strategy, Inclusive London
•    the Mayor’s London Health Inequalities Strategy
•    the Mayor’s Economic Development Strategy for London.
 

5.1.    Executive Director’s approval is being sought for the allocation of up to £563,408 from the Royal Docks Good Growth Fund capital funding to deliver the Compressor House project and the use of £1.725m capital from the UK government’s Levelling Up Fund secured by the London Borough of Newham for investment into Compressor House, following MD2982 which approved the receipt of this funding.

5.2.    Funding of expenditure up to £1.725m from London Borough of Newham will be received in arrears upon claims to London Borough of Newham, this will be based on successful claims to the GLA from Really Local Group. The majority of this expenditure and funding will be incurred in 2023-24. Expenditure of up to £563,408 from Royal Dock’s Good Growth Fund capital funding is expected to be spent mostly in 2024-25 and some into future years. As per MD2338 Royal Dock’s budget is externally funded via Business rate retention income and from borrowing. Expenditure and income budget for Royal Docks 2024-25 and 2025-26 is in the 2023-24 indicative planned budget, however, future years budget is subject to future budget setting processes and therefore break clauses should be in contracts, should funding not be available in future years. 

5.3.    The Royal Docks team will manage the funding of this project. The team sits within the Strategic Projects and Property unit, which is part of the Housing and Land Directorate. 
 

6.1.    The foregoing sections of this report indicate that the decisions requested of the Executive Director in accordance with his/her delegated authority concern the exercise of the Authority’s general powers; falling within the Authority’s statutory powers to do such things considered to further or which are facilitative of, conducive or incidental to the promotion of economic development and wealth creation and social development in Greater London; and in formulating the proposals in respect of which a decision is sought officers have complied with the Authority’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 Executive Director 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 ( age; disability; gender reassignment; marriage and civil partnership; pregnancy and maternity; race; religion or belief; sex; sexual orientation) 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 Executive Director should have particular regard to section 3 (above) of this report.  

6.3.    Section 1 above indicates that the GLA intends to provide grant funding.  Officers must ensure that the funding be distributed fairly, transparently, in accordance with the GLA’s equality policy, subsidy control principles and with the requirements of section 12 of the Authority’s Contracts and Funding Code.

6.4.    Furthermore, officers must ensure that: 

•    they are content that their proposals can be delivered in manner enabling full compliance with the terms of the LUF funding agreement with LB Newham; and 
•    an appropriate funding agreement be put in place between and executed by the GLA and the recipient, before any (a) commitment to fund is made; and (b) funding is paid to the recipient.