Agenda item

(Led by: Alan Reiss, Author: Alex Clarke)

The Board considered a report of the Director of Policy, Strategy and Communications on the reinvestment of grants and loans and Enterprise Zones.

The report provided an update on issues of business finance, particularly the role of the LEP in making business investments and the future use of returned funds from the Growing Places Fund. 

It was noted that in order to ensure that the LEP continues to fulfil a role that is not met by the existing business finance market, work had been undertaken to understand current business finance trends. It was proposed that the LEP looks to develop a future business investment model which will require exploring a different set of skills and structures.  A new model would also need to deliver a different set of investment products, and provide reinforced approaches to existing programmes such as for Enterprise Zones.  Members discussed the detail of how this could be further developed, including a possible structured income fund and flexible growth fund and it was proposed that the LEP take the following steps:

·         Engage with external advice on the approach to developing the new model.

·         Work to develop the internal capacity required to enable the LEP to service the commercial grant and loan activity, with the ambition to establish a centre of excellence.

·         Further scoping of two products - a structured income fund and flexible growth fund - and soft market testing of the opportunities in the existing market.

It was reported that the Business Innovation and Growth Panel had discussed elements of the reinvestment of grant and loans work at their last meeting. It was agreed that a working group be established with representation from business and it was suggested that the group report to the Business Innovation and Growth Panel on development of the two products.  A report would be prepared for a future meeting outlining the potential costs and income from the proposed products including interest, technical support, resource and potentially balancing a portfolio of risk.

The Board noted the background and context to the Leeds City Region Enterprise Zones (EZ) programme and the barriers to the development of a number of EZ sites.  Members discussed the funding options and policy guidance for provision of grant support to assist with accelerated delivery of the programme which was detailed in the report. It was recognised that the proposed approach to the EZs would also help to ensure that the maximum number of schemes can be developed within the funding timescales.

Resolved:

(i)         That the progress of work to date on business finance be noted and the following three actions be endorsed:

(a)       Engage external advice on the approach and design of the two

products.

(b)       Work to develop the internal capacity required to enable the LEP to service our future commercial grant and loan activity, with the ambition to establish a centre of excellence.

            (c)        Further scoping of the two products and soft market testing of                       the opportunities in the existing market.

(ii)        That the following two business investment products to test further

through this work be noted:

(a)       A returnable investment, structured income fund supporting

regional growth whist delivering maximum returns to the LEP.

(b)       A flexible growth fund that can be used to invest in targeted

investments to respond to changes in business needs, where there is clear evidence of market failure and therefore additional levels of risk.

(iii)       That the policy guidance outlined in paragraphs 2.18 – 2.38 of the

submitted report for provision of grant support to the private sector on project with a demonstrable viability gap as a funding option for the Leeds City Region Enterprise Zone (EZ), to assist with accelerated delivery of the programme be approved.