Greater Birmingham & Solihull Local Enterprise Partnership Programme Delivery Board Agenda Wednesday 03 March 2021 – 9.30-11.30am Remote meeting via Zoom
Video Conference – Includes Papers Partially Exempt from Publication Under Section 12A of the Local Government Act 1972
AGENDA
Start Subject Pre Read Purpose Presenter Ref Time 1 09:30 Welcome & Apologies N/A - Chair 2 09:35 Declarations of interest N/A - Chair
Decisions and Actions from previous To agree the decisions and actions of the previous 3 09:40 Programme Delivery Board Meeting Attached meeting and update on any matters arising. Chair and Matters Arising
Presentation: 5G Application Verbal / To give an overview of the roll out of the 5GAA and Christian Cadwallader / 4 09:45 Accelerator Presentation impact on the region. West Midlands 5G
To note the LGF programme update and 2020/21 5 10:00 LGF Programme Update Attached Kerry Billington financial position.
To note the updated position of the Getting Building 6 10:10 Getting Building Fund Update Attached Kerry Billington Fund.
To note the updated position of the progress to LGF (Department for Transport Major 7 10:20 Attached commit the Department for Transport Returned Kerry Billington Schemes Returned Funding) Report Funding to the LGF Programme.
EZ Programme Update To note the EZ project, programme and financial 8 10:30 Attached Christian Cadwallader (Partially Exempt from Disclosure¹) update.
Levelling Up Fund/UK Shared To provide update on the intelligence around Levelling 9 10:40 Verbal Kerry Billington Prosperity Fund Up/UK Shared Prosperity Fund.
1This report is partially exempt from disclosure because it contains information relating to the financial or business affairs of any particular person (including the authority holding that information) Page 1 of 83 Start Subject Pre Read Purpose Presenter Ref Time Investment Reports a) To approve the Full Business Case and a) Christian Cadwallader a) EZ, Digbeth High Street (FBC) investment of £15.72m from the Enterprise Zone. 10 10:45 Attached b) To approve the Full Business Case and note b) Kerry Billington b) M&P Hometel (FBC) investment of £1.7m capital grant funding support required should funding become available.
Change Requests a) Christian Cadwallader a) EZ – Birmingham Smithfield a) Increase in project development funding, £0.975m
b) Change in timescale for delivery of outputs and Attached b) Kerry Billington b) Growing Places Fund – The outcomes. Grand Hotel 11 11:00 c) Kerry Billington c) Growing Places Fund - Jewellery c) Change in financial profile and delivery dates of Quarter Townscape Heritage outputs. Project d) Exempt from Publication under Clause 3 of Section d) Christian Cadwallader d) Change Request 12A of the Local Government Act 1972. Exempt from Disclosure¹
To recommend Board approval to extend the 12 11:20 Assurance Framework – Accountable Attached Accountable Body Joint Working Protocol to 31 March a) Kerry Billington Body Joint Working Protocol 2022.
13 11:25 Any Other Business
Page 2 of 83 Dates and Forward Plan Items for Future Meetings:
PDB Meeting Location Item Date Wednesday 31 TBC • Presentation – Martineau Galleries (Provisional, Hammerson’s) March • Programme Updates – LGF, GBF, EZ, GPF • Investment Reports – LGF, EZ o TICE Phase 2 (Addendum Phase 1) (FBC) o EZ - Paradise Phase III (IBC) - Provisional o EZ - Birmingham Smithfield (Enabling Works, OBC) o Birmingham Life Sciences Campus Change Request Wednesday 19 TBC • Presentation - TBC May • Programme Updates - LGF, GBF, EZ, GPF. • Investment Reports - LGF, EZ: o LGF - Hagley Road Sprint (FBC) o A457 Dudley Road (FBC) o Martineau Galleries (OBC) o EZ - Birmingham Smithfield (Enabling Works, FBC)
Wednesday 23 TBC • Presentation - TBC June • Programme Updates – LGF, GBF, EZ, GPF Investment Reports – LGF; EZ
Time unless stated otherwise is 9:30 - 11:30am Note: Special PDB Meetings may be held to consider major LGF or EZ projects as appropriate.
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GREATER BIRMINGHAM & SOLIHULL LOCAL ENTERPRISE PARTNERSHIP Programme Delivery Board – Decisions & Actions Wednesday 03 February 2021, 09:30 – 11:30
By ZOOM (online meeting)
Present: Mike Lyons (ML) – Connectivity Director, GBSLEP (Interim Chair) Michelle Nutt (MN) – Assistant Area Director, WM&SW, CLGU City Council (Accountable Body Representative) Paul Faulkner (PF) – Chief Executive, Greater Birmingham Chambers of Commerce Ian Miller (IM) – Chief Executive, Wyre Forest District Council Roger Mendonça (RM) – Chief Operating Officer, West Midlands Growth Company Phil Edwards (PE) – Assistant Director, Birmingham City Council Alison Jarrett (AJ) – Assistant Director, Development and Commercial, Birmingham Tony McGovern (TM) – Managing Director, Cannock Chase District Council City Council
Apologies: Mary Morrisey (MM) – Solihull Metropolitan Borough Council Louise Brook-Smith (LBS) – Development & Strategic Planning Advisor, Arcadis Patrick Hanlon (PH) – GBSLEP Representative
In Attendance: Kerry Billington (KB) – Consultant Programme Manager, GBSLEP Ed Watson (EW) – Interim Chief Executive, GBSLEP Christian Cadwallader (CC) – Consultant Programme Manager, GBSLEP Kate Shaw (KS) – Chief Operating Officer, GBSLEP Krystalla Michael (KrM) – Head of PMO, GBSLEP Satnam Rana-Grindley (SRG) – Head of Communications, GBSLEP Greg Raybould (GR) – Project Support Officer, GBSLEP
Minutes and Decisions: # Agenda Item Minutes Decisions & Actions
The Chair welcomed everyone to the meeting of the Programme Delivery Board (PDB). Action Reference 25 - Circulate Investment Paper Apologies were noted as above. to absent Board Members for written approval, as Welcome and investment decisions not quorate. 1 apologies It was noted that, in accordance with the Assurance Framework, three private sector representatives were required for investment decisions to be quorate. For the investment decisions on Creative Content Hub and Curzon Station Public Realm Change Request quorate decisions would not be possible due to declared interests. Therefore, these two investment decisions will be subject to a Page 4 of 83 Item 3
GREATER BIRMINGHAM & SOLIHULL LOCAL ENTERPRISE PARTNERSHIP Programme Delivery Board – Decisions & Actions Wednesday 03 February 2021, 09:30 – 11:30
By ZOOM (online meeting)
# Agenda Item Minutes Decisions & Actions
written communication of approval from the absentee PDB members acting as private sector representatives.
Post Meeting Note: Approvals were submitted from Pat Hanlon and Louise Brook-Smith. Declarations RM declared an interest in the Creative Content Hub (Investment Decision)
of Interest TM declared an interest in Lichfield Motion Capture (Investment Decision to 2 note) PE declared an interest in EZ Southside Public Realm (Investment Decision) ML declared an interest in EZ Curzon Station Public Realm (Change Request)
Decisions The decisions and actions of the PDB meeting that took place on 11 November and actions 2020 were agreed. 3 of previous It was noted several open actions are to be covered as part of the agenda. meeting
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GREATER BIRMINGHAM & SOLIHULL LOCAL ENTERPRISE PARTNERSHIP Programme Delivery Board – Decisions & Actions Wednesday 03 February 2021, 09:30 – 11:30
By ZOOM (online meeting)
# Agenda Item Minutes Decisions & Actions
LGF The LGF programme update was presented to PDB, it was highlighted 83% of GBSLEP PDB Members: Programme the full year spend target has been achieved to date. The programme is ahead Update of profile within just under £9,000,000 to be claimed in Quarter 4. As previously 1. Noted the Local Growth Fund (LGF) 2020-21 reported, for the Snowhill Public Realm project the use of programme ‘freedoms latest spend and remaining financial profiles and flexibilities’ will be used to ensure full draw-down of the remaining grant by compared to the projected spend target; 31 March 2021. 2. Noted the risks associated with not achieving £124,000 of funding held against contingency for the Journey Time Reliability spend of the LGF programme by 31 March 2021, Project has been released back into the programme. Approval for additional including a further expected release of funding of grant of £10,000 to the Old Print Works and £114,000 to the Open House REP £0.225m back into the programme; projects was given by the Chief Executive against this programme headroom which will be claimed by 31 March 2021. 3. Noted the proposed use of ‘freedoms and The programme team has been notified that the Unlocking Stalled Housing flexibilities’ available to the GBSLEP to manage Programme has two schemes which are not likely to require £163,000 of grant budgets between capital programmes to ensure 4 and the Construction Skills for Work Readiness project will not utilise the full spend of the LGF programme award by the 31 remaining £10,0000. It was noted, a proposed investment report to support the March 2021; and Creative Content Hub to be discussed later in the meeting, can claim this money. 4. Noted the indicative rating of meeting Government’s expectations on Governance, Strategic Impact and Funding Delivery ahead of The chair noted the excellent progress, towards the LEPs targets and it was a the Annual Performance Review meeting on 10 credit to team to keep us on track. February 2021. A question was asked by PDB if the resources were secure with Birmingham City Council as the Accountable Body and that they were not at risk of being lost. This was confirmed to be the case. A discussion took place regarding the Snowhill Project, stating the need to keep pressure on the contractor to prevent any more programme slippage or increase in the rollover of funds to the next year.
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GREATER BIRMINGHAM & SOLIHULL LOCAL ENTERPRISE PARTNERSHIP Programme Delivery Board – Decisions & Actions Wednesday 03 February 2021, 09:30 – 11:30
By ZOOM (online meeting)
# Agenda Item Minutes Decisions & Actions
Getting An update was provided on the Getting Building Fund and the two GBSLEP GBSLEP PDB Members noted: projects Precision Health Technology Accelerator and University Station. Building Fund The progress of the Getting Building Fund Following some difficulties in getting the back-to-back Grant Agreements in Update Programme and financial performance for place, progress is being made on both projects. with no issues currently 2020/21 to date; and identified that may affect their ability to drawdown the grant in full by 31 March 5 2022 It was noted that some early work had started on site of the PHTA project The progress of the projects allocated to the and that the enabling works Planning Application had just been approved. Getting Building Fund (GBF) against the GBSLEP allocation. There was a question regarding the reduction in outputs on the PHTA project. It was stated the project had not seen an overall reduction in the outputs, other than construction jobs; they have been apportioned against the two different funding streams (LGF and GBF).
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GREATER BIRMINGHAM & SOLIHULL LOCAL ENTERPRISE PARTNERSHIP Programme Delivery Board – Decisions & Actions Wednesday 03 February 2021, 09:30 – 11:30
By ZOOM (online meeting)
Progress was presented to PDB on the performance of the DfT returned funding LGF GBSLEP PDB Members: with 99% of the £21.85 million now approved. As of yesterday (02/02) contracts Additional are starting to be signed. Some final grant agreements are still awaiting 1. Noted progress of the £21.851m Local Growth Funding (DfT) signature, but it was noted all projects are aware of the 31 March deadline with Fund (Department for Transport Returned) grant Update no firm commitment of an extension. funding and approval of projects to be expended by 31 March 2021; It was further noted that this money provided a real opportunity to provide nearly 2. Noted the small amount of headroom left in the 2,000 new jobs and support nearly 2,000 new leaners. programme; and
Roll over of circa £3.5 million to 2021-22 is awaiting approval from BEIS. The 3. Noted the risks associated with the programme approval to this has been given in principle but formal approval is yet to be utilisation in full by 31 March 2021 and the received. Colleagues at BEIS stated approval is being chased through proper mitigation measures being implemented. channels and governance structures. It was stated a risk analysis was carried out before Christmas to identify a list of projects that may go over 31 March deadline. 6 There were questions regarding confidence in the programme to spend the £21.85 million allocation as despite approval only 5% had been claimed. It was asked if there is a backup plan to give the money to projects ready to spend should any projects be unable to draw down as planned.
It was stated projects cannot claim until the Grant Agreement has been signed, with GBSLEP therefore expecting claims in February with two projects already in contract: Enterprise Wharf and Tyseley Incubator for Clean Energy (Phase 1).
It was suggested an end of January claim figure be circulated, followed by an end of February figure to provide confidence that the GBSLEP will not lose any of this money. KB informed members that there had been no further claims received in January but the report for the next meeting would give the latest figures for February.
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GREATER BIRMINGHAM & SOLIHULL LOCAL ENTERPRISE PARTNERSHIP Programme Delivery Board – Decisions & Actions Wednesday 03 February 2021, 09:30 – 11:30
By ZOOM (online meeting)
# Agenda Item Minutes Decisions & Actions
It was stated that all projects were aware of the tight timescales and were working hard to maximise grant drawdown by the deadline, and some of the skills projects were benefitting from the Colleges being closed to students. The Programme Delivery Team are in constant communication with the project teams and updated cash flows being regularly sought from projects, with any risks to that spend highlighted sooner rather than later.
PDB commented that the programme looks very tight, whilst still in the pandemic, COVID-19 is likely to have an impact and £21 million spend may seem unrealistic. Action Reference 26 – Attach RAG status and provide project status on the DfT returned funding A suggestion was made for RAG status to be attached to each project for projects. drawdown with more detailed project status information being made available to PDB.
The team were encouraged to seek any support and influence from PDB members in the face of any challenges that may arise. This offer was gladly accepted.
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GREATER BIRMINGHAM & SOLIHULL LOCAL ENTERPRISE PARTNERSHIP Programme Delivery Board – Decisions & Actions Wednesday 03 February 2021, 09:30 – 11:30
By ZOOM (online meeting)
# Agenda Item Minutes Decisions & Actions
GBSLEP Executive were hoping to have further details on the Levelling Up Fund Levelling Up and UK Shared Prosperity Fund, however it is looking more likely to be a part of Fund the budget due in March 2021.
LEPs are currently lobbying collectively for money to come directly to the LEP 7 and the GBSLEP are working proactively with pipeline projects ready to come forward.
It was noted it would be useful to have all intelligence around different funding Action Reference 27 – Gather intelligence and streams centralised along with their certainty levels. certainty levels around all proposed funding streams coming forward.
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GREATER BIRMINGHAM & SOLIHULL LOCAL ENTERPRISE PARTNERSHIP Programme Delivery Board – Decisions & Actions Wednesday 03 February 2021, 09:30 – 11:30
By ZOOM (online meeting)
# Agenda Item Minutes Decisions & Actions
Enterprise The EZ Programme status and project updates was presented to PDB. It was The GBSLEP PDB Members: noted Paradise Phase Three IBC had now been received and this would be Zone Update 1. Noted the Enterprise Zone Programme Project reported back to PDB soon along with the Assurance Review for Phase One. Q3 Updates; The Smithfield Road Map can be found within the appendices, and BCC are 2. Noted the Enterprise Zone Q3 2020/21 currently working with Lendlease to get a Joint Venture Agreement in place. An Financial Update. OBC is due for the enabling works in the next few weeks. There is no significant change in the EZ performance however GBSLEP are looking to improve the data coming forward to PDB. The programme remains Amber given the insecurities around the Business Rates Income (BRI). 8 A question was posed regarding the source of the BRI intelligence and BCC confirmed it came from them as the collector of Business Rates. It was commented BRI is monitored regularly by BCC officers and updated projections cascaded to the LEP. The low spend on development for Smithfield was queried. It was stated that spend is significant on Smithfield and resources are being committed to progress the project. This will be evidenced by a Change Request coming to board in March ‘21 for additional development funding.
Investment a) Creative Content Hub GBSLEP PDB Members: Reports The Investment Paper was summarised with a detailed background provided on a) Approved the Full Business Case and the project highlighting its importance to the region. It was made clear that claw investment of £3m from Local Growth 9 back conditions will be included as part of the grant agreement to capture any Fund/Growing Places Fund. The final mixture of uplift in value from the current development appraisal. this funding to be delegated to the Interim Chief Executive to approve. NB: Written approval received by board members to achieve Quorum.
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GREATER BIRMINGHAM & SOLIHULL LOCAL ENTERPRISE PARTNERSHIP Programme Delivery Board – Decisions & Actions Wednesday 03 February 2021, 09:30 – 11:30
By ZOOM (online meeting)
# Agenda Item Minutes Decisions & Actions
PDB members went on to comment that this is a significant strategic opportunity for the LEP to show its credentials and to put the creative industry on the front foot in the West Midlands. Members also noted that this is something the region urgently needs and would be a real ‘flag in the ground’, as part of wider creative sector strategy.
b) EZ Southside Public Realm FBC b) Approved and considered the Full Business Case and investment of £9.m from the Enterprise The Investment Paper was summarised to PDB highlighting the high BCR of 2.5 Zone programme. (Additional funding requested, and the private sector investment into the project. It was noted there has been a circa. £1.4m). £1.4million increase in the funding request as the original estimates were undertaken pre COVID-19 and contractor costs have increased during the procurement stage of the project. PDB members challenged whether the increased costs were due to COVID-19 or whether lessons need to be learned on estimating. It was stated the impact of Brexit also played a role in the increased costs and the Outline Business Case was taken from a particular point in time from which a lot has progressed in terms of design and development. It was also confirmed the quality of the Public Realm will replicate that seen around the city but there needs to be a balance struck with access to utilities often needed.
Change GBSLEP PDB Members: a) Curzon Station Public Realm Requests a) Approved change in financial profile. 10 The Change Request was put to board highlighting the financial reprofile as set NB: Written approval received by board members to achieve out in the paper, bringing funding forward in the light of HS2’s move to a two- Quorum. stage procurement process. Furthermore, it was noted additional funding of £481,058 is also required to support the detailed work required for the Page 12 of 83 Item 3
GREATER BIRMINGHAM & SOLIHULL LOCAL ENTERPRISE PARTNERSHIP Programme Delivery Board – Decisions & Actions Wednesday 03 February 2021, 09:30 – 11:30
By ZOOM (online meeting)
# Agenda Item Minutes Decisions & Actions
Contractor to develop a Final Target Cost. BCC confirmed that the additional costs are affordable in the existing EZ financial model.
Written Feedback (Board Member): Clarity was sought regarding the management percentage fee included by HS2 which may be considered excessive given the significant change in numbers on a consistent basis. It was noted that it would be good to understand if the management cost increases as the overall cost increases for future change requests.
Response: The management charge is set in accordance with the existing agreement between BCC and HS2 to manage the procurement process. The overall percentage will not increase however the management fee will increase in line with the existing agreement subject to any increased procurement costs. Any further management charges will be subject to review once the preferred contractor is appointed.
b) Snow Hill Growth Strategy
The Change Request was summarised, outlining the need to change delivery b) Approved change in financial profile. timescales and grant drawdown to 2021/22 due to significant delays in the programme. Circa £207,000 will be rolled over into 2021/22, with the works to be completed by April 2021.
c) LGF Unlocking Stalled Housing c) Approved decrease in grant investment. The Change Request was summarised to PDB, nothing that two projects would not need their whole grant allocation. £163,000 can be recycled back into the programme with no change to the housing numbers delivered. Any grant not drawn down by 31 March 2021 will be managed by Finance Birmingham through Freedoms and Flexibilities. Page 13 of 83 Item 3
GREATER BIRMINGHAM & SOLIHULL LOCAL ENTERPRISE PARTNERSHIP Programme Delivery Board – Decisions & Actions Wednesday 03 February 2021, 09:30 – 11:30
By ZOOM (online meeting)
# Agenda Item Minutes Decisions & Actions
It was noted by PDB that this has been a hugely successful project and hope to see a scheme like this repeated in the future.
Decisions for All noted and further details if required were offered GBSLEP. GBSLEP PDB Members noted the approval by noting written procedure for:
It was commented there was a lot of work to do around the Hippodrome AAA a) Hippodrome Access All Areas Phase One given the uncertainty in the sector, but it is great to see LEP support of the (Delivery Funding) project in these challenging times. b) Lichfield Motion Capture Studio and VR Performance Motion
11 c) BMet Built Environment (Site Management) Academy
d) Old Print Works, Make It Sustainable Ltd (Change Request)
e) Open House, the REP
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GREATER BIRMINGHAM & SOLIHULL LOCAL ENTERPRISE PARTNERSHIP Programme Delivery Board – Decisions & Actions Wednesday 03 February 2021, 09:30 – 11:30
By ZOOM (online meeting)
# Agenda Item Minutes Decisions & Actions
Thanks were given to ML for chairing the meeting, in the absence of a new appointed chair and he was asked to confirm whether he can be on standby to chair the next meeting.
12 AOB It was also noted by PDB that it would be great to do some communications Action reference 28 - Develop a communication around the LGF Programme as it draws to close. It was stated there was a lot of plan for the LGF Programme to include the early great work achieved to be credited across the programme even in the early days and more recent programme achievements. and this should not be lost. It was confirmed that this is in the pipeline and the LEP Executive have plans to deliver these good news stories.
Open Actions: Action Meeting Agenda Item Agreed Action Assigned Completion Status No Date to Date 18 07-10-20 7a - EZ Programme Organise a presentation to be included with the CC Following Open Update & Financial interim Business Case for Paradise Phase 3. Submission Principles
21 11-11-20 4- HS2 Presentation Demonstrate how residential projects are funded CC Following Open (On-going) through projects which are invested through EZ but Submission have no set returns through business rates. of related project 22 11-11-20 5a – Birmingham Timetable of governance arrangements for this CC 03-02-20 Closed Smithfield, Strategic project, to be mapped out and presented February Outline Business Case PDB.
23 11-11-20 5a – Birmingham Feedback concerns raised as to why the CC 03-02-21 Closed Smithfield, Strategic appropriate level of affordable housing cannot be Outline Business Case delivered in a scheme of this size.
Page 15 of 83 GREATER BIRMINGHAM & SOLIHULL LOCAL ENTERPRISE PARTNERSHIP Programme Delivery Board – Decisions & Actions Wednesday 03 February 2021, 09:30 – 11:30
By ZOOM (online meeting)
Action Meeting Agenda Item Agreed Action Assigned Completion Status No Date to Date Complete: Feedback provided to project and will . remain on the project issue log for resolution during OBC stage. 25 03-02- 1 – Welcome and Circulate Investment Paper to absent board KB 03-02-2021 Closed 2021 Apologies members for written approval, as Quorum not achieved. 6 - LGF Additional Attach RAG status and provide project status on 26 03-02- KB 03-03-2021 Open Funding (DfT) Update the DfT returned funding projects. 2021
27 03-02- 7 – Levelling up Fund Gather intelligence and certainty levels around all EW 03-03-2021 Open 2021 proposed funding streams coming forward.
28 03-02- 8 – AOB Develop a communication plan for the LGF KB/ 31-03-2021 Open 2021 Programme to include the early and more recent Saboor programme achievements. Arif
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GREATER BIRMINGHAM AND SOLIHULL LEP PROGRAMME DELIVERY BOARD
3 MARCH 2021 LOCAL GROWTH FUND – PROGRAMME UPDATE
Recommendations The GBSLEP Programme Delivery Board is requested to: Note the Local Growth Fund (LGF) 2020-21 latest spend and remaining financial profile compared to the projected spend target; and Note the proposed use of ‘freedoms and flexibilities’ available to BCC to manage GBSLEP budgets between capital programmes to ensure full spend of the LGF programme award by the 31 March 2021. Background This paper provides the current financial position and the remaining financial profiles for the final year of the LGF programme which concludes on 31 March 2021. The total allocation over the six-year programme of £186.05m must be both contractually committed and defrayed by 31 March 2021. The final year spend profile requires defrayment of £53.32m, which includes the £21.50m underspend from previous years carried forward and represents the highest expenditure target of any previous financial year. The challenge has been to perform against a quarterly profile agreed with BEIS in June 2020 for the 2020-21 financial year, with any slippage adding pressure on the year-end performance. As the COVID-19 pandemic continues, the impact on the programme appears to be well managed to date and continues to be closely monitored, as does the impact of BREXIT on the supply of goods and services to some projects.
Overall Financial Position from Start of Programme Over the five years to March 2020, the programme achieved an outturn of £132.73m, with £53.32m remaining to be defrayed in 2020-21. The profile of annual BEIS awards and actual project expenditure is summarised in Table 1. The outturn for 2019-20 is slightly higher (£38k) than previously reported due to the Programme Management (PM) levy actual claim being higher than was estimated at the time of the return. 15-16-17 17-18 18-19 19-20 20-21 Total £m £m £m £m £m £m LGF Award £96.489 £25.699 £19.303 £12.716 £31.847 £186.055
Financial Year Total LGF Outturn 15-16-17 17-18 18-19 19-20 20-21 £m £m £m £m £m £m Actual /Forecast £62.599 £23.229 £24.239 £22.671 £53.317 £186.055 Progress towards Award 65% 90% 126% 178% 167% 100% Table 1: Six-Year LGF Programme Financial Status (Source: BEIS Q3 2020-21 Return)
Page 17 of 83 Item 5 Financial Position for 2020-21 The actual and forecast quarterly grant spend of contractually committed projects for the final year of the programme, as recorded on the recently received Project Monitoring Returns which have been entered into Verto, is summarised in Table 2. The target spend forecast as reported to BEIS on 17 June 2020 is included in Table 2 for comparison. The profiled spend reflects the reduction for the PMO levy paid in 2019-20.
Quarter Quarter Quarter Quarter Annual One Two Three Four Total ACTUAL ACTUAL ACTUAL Forecast Forecast Target Spend reported to BEIS 13.05 17.42 13.10 9.79 53.36 17 June (£m) ACTUAL/Profile 13.281 17.90 13.14 9.00 53.32 Spend (£m)
Variance (£m) +0.23 +0.48 +0.04 (0.79) (0.04)
Table 2: Quarterly grant spend forecast for 2020-21 (Source: Verto quarter three BEIS return) 1 The quarter one actual figure has been amended from £13.33m to take account of an adjustment agreed with BCC in the Unlocking Stalled Housing programme. In Q3 20-21, our grant claims were £13.14m, giving a 20-21 year to date total of £44.32m, which means that the challenging target for this financial year to the end of quarter three has been exceeded by £0.75m. This is over 83% of the full year target achieved to date and a programme total to date of £177.05m (95%) against the allocation of £186.05m which is now fully allocated and confident of achieving 100% spend of this by March 2021. The remaining grant spend forecast of £8.96m in quarter four is outlined in Table 3 below:
Quarter Four Project Forecast £m
Birmingham Energy Innovation Centre 2.90 Snow Hill Public Realm 1.82 Unlocking Stalled Housing 1.45 Commonwealth Games 2022 1.00 Quantum Technology Innovation Hub 0.47 Cannock Chase Engineering Academy 0.31 PM Levy 0.25 5G Application Accelerator 0.24 Alliance House Redevelopment 0.19 Open House, REP 0.11 Old Print Works 0.09 Creative Content Hub 0.17 Total 9.00 Table 3: Remaining quarter four grant forecast for 2020-21 (Source: Verto quarter three BEIS return) Despite the continuation of the national lockdown and leaving the European Union, there has been no further major delays reported in any of the remaining projects to present a risk to the overall outturn, with the exception of Snow Hill Public Realm, as previously reported. Page 18 of 83 Item 5 The use of programme ‘freedoms and flexibilities’ will be used to ensure full draw-down of the remaining grant by 31 March 2021. Progress on Key Projects Snow Hill Public Realm The Snow Hill Public Realm project comprises a programme of sub-projects focused on public realm and public highway enhancements. The improvements to connectivity will improve the setting of Snow Hill railway station and the appearance of public realm in the historic Colmore area; enhance connectivity for active modes; reduce delays for all users outside Snow Hill Square; reduce vehicular flows along Colmore Row; and mitigate closure of selected highway links through reconfiguration and optimisation of the highway network. It comprises a number of phases with the first phase – Project 1.1 - Colmore Row and Livery Street receiving £4.66m grant support from the LGF programme. Work commenced on site in June 2020 and the photos below show that good progress has been made on site and works are due to complete in late Summer 2021.
Scope of Snow Hill Project 1.1
On the left 12th February: Excavation works outside shop frontages (Kuala Poke) and right: Excavation works to northern footway (adjacent to square)
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On the left 18th February: Concreting works outside to shop frontages (Kuala Poke/Sainsbury’s) and right: Concreting works to northern footway (adjacent to square), including bus stop detail.
Commonwealth Games 2022 The redevelopment of Alexander Stadium for the Birmingham 2022 Commonwealth Games, providing a Game Changing Legacy for Birmingham, the GBSLEP region and neighbouring LEP’s. The new stadium is required to facilitate track and field events and ceremonies during The Commonwealth Games in 2022, whilst providing the catalyst for broader investment into the stadium site, and wider West Midlands. Works are progressing well on site, as illustrated in the recent photographs below, and financial claims are ahead of schedule.
Page 20 of 83 Item 5 Birmingham Energy Innovation Campus The Birmingham Energy Innovation Campus (BEIC) project is supporting the completion of a 1,788sqm applied research and innovation facility based at Tyseley Energy Park, Birmingham, supported by £7.0m of LGF grant. It aims to incorporate research, teaching and testing / validation space, and bring together a range of energy, waste and transportation capabilities as part of one multi-disciplinary team. After planning was approved for the building, work commenced on site in May 2020. The contractor has been working to programme with cladding nearing completion, M&E well underway, internal installations taking place and external groundworks to take place. The building is due to complete on 26 April 2021, although there may be a slight delay to this timescale, which will not affect the drawdown of the LGF grant by 31 March 2021.
The Vision Progress so far….
Freedoms and Flexibilities The LGF programme has the ability to use ‘freedoms and flexibilities’ across other capital programmes to be able to ensure that it achieves its grant financial targets within a financial year. As previously reported, the only project which will not achieve their full year grant draw-down by March 2021 is the Snow Hill Station Public Realm project, which suffered a delay to the start on-site and despite progressing well it will not complete before the end of March 2021. The estimated £1.33m of grant draw-down will be managed within the Accountable Body freedom and flexibilities against EZ programme spend in 2020/21. The Programme Team costs and other professional fees associated with managing the delivery of the LGF and LGF (DfT) programmes are covered in the Programme Page 21 of 83 Item 5 Management Levy. This is charged to the programme quarterly in arrears. With the close of the programme so near, it is intended to calculate this recharge on a monthly basis. The latest reconciliation between the forecasts, the actual costs and budgeted amounts has indicated there is sufficient budget cover for the quarter four costs. There is also budget cover to fund the closedown costs in the first few months of 2021, and the principle of this has been agreed with BCC.
Recycled LGF Funds There has been a repayment of grant from a project sponsor totaling £0.60m on 4 December 2020 and clawback of £1.05m from the Redditch Eastern Gateway scheme received under the terms and conditions of the grant agreement. As agreed at the January GBSLEP Board meeting, a Finance Working Group (FWG) will be established to investigate a number of different funding scenarios and different investment options to decide on what a number of funding balances should be spent on. The £0.60m repayment has now been approved for investment in the Creative Content Hub project last month, whereas the clawback of £1.05m will form part of this FWG review due to the wider flexibilities it could now be considered for, including future revenue investment. A clawback payment of the balance of Redditch Gateway (£0.79m) grant funding is due on or before 10 February 2025 under the terms of the clawback agreement. Pipeline In addition to those projects which were on the LGF (DfT) pipeline with a conditional approval, the Programme Delivery Team maintains a pipeline of projects requiring funding. These projects, as appropriate, will be progressed to Full Business Case stage so that when additional funding becomes available, they will be ready to commence delivery. New projects are continuing to come forward for consideration and strategic fit assessments are carried out on them to progress them onto the Programme Pipeline and expectations are being managed as there is currently insufficient LGF funding to invest in them. It is hoped as part of the recent Spending Review announcement on 25 November that further details of the criteria to submit bids for the £4billion Levelling Up Fund and the UK Shared Prosperity Fund will be revealed, with prospectuses for the Funds now likely as part of the Budget announcement in March 2021. Outputs and Outcomes The latest position for achievement of outputs and outcomes for the LGF Programme and forecast to the end of the Programme, as reported to BEIS in the quarter three return this month, is shown in Table 4 below:
Forecast to % Current Actuals end of Progress Forecast to Achieved Target Programme towards end of to date as % of Target Programme Target
Jobs 13,120 20,300 65% 33,769 167% Created/Safeguarded
Housing Units 1,592 4,900 33% 14,373 293% Completed
No of Learners 3,444 12,500 27% 6,906 54% Assisted
Table 4 – Latest Outputs and Outcomes Summary (Source: Verto quarter three BEIS Return) Page 22 of 83 Item 5 Collection of outputs and outcomes beyond March 2021 will need to continue to March 2025 to report to BEIS. This is likely to be required on a six-monthly basis and reported via BEIS’s Delta system. There will need to be resources in place within the GBSLEP to ensure that this can happen. Programme Management System (VERTO) Update VERTO is the new programme management system which went live in July 2020 for the LGF programme with quarterly reporting generated directly from it resulting in a greater level of efficiency in reporting on the programme to this Board, BEIS and the LEP Board. During January and February, training has been taking place with project sponsors, which if possible, will lead to direct input by them of the quarter four project monitoring returns. Annual Performance Review The Annual Performance Review (APR) is the formal way by which the Government and each LEP meet to discuss the contribution the LEP has made towards driving forward local economic growth; to review LEP governance and assurance processes; to look at progress on delivery of key local growth programmes; and to discuss the LEP’s strategic impact, priorities and challenges for the year ahead. Critically, the Annual Performance Review also acts as a key milestone in the process of confirming Getting Building Fund payments for the following financial year. Ahead of the APR review meeting, Cities and Local Growth (CLG) Unit Area Leads gather information from a variety of sources in preparation for the discussion. GBSLEP submitted the APR Preparation Update to BEIS by the deadline of 20 January 2021. The CLG Unit also completed compliance checks of all 38 LEPs during October and November 2020. Ahead of the APR review meeting with GBSLEP on 10 February 2021, GBSLEP has received feedback from BEIS that the initial results of their review ahead of the meeting have indicated that they consider the LEP as meeting their expectations on Governance, Strategic Impact and Funding Delivery. In particular, the information supplied to them gives them confidence that we will fully spend the LGF programme award by the end of March 2021 taking into account the ability to use agreed freedoms and flexibilities. Their indicative rating was based on the quarter two LGF data return. These are indicative ratings only and are to help frame the conversation at the APR meeting. The APR meeting provided an opportunity to discuss these further, including any additional evidence, context, or mitigating circumstances that the LEP wished to be taken into consideration and any progress made since quarter two. The indicative ratings will be reviewed and updated after the APR meeting and after the quarter three funding delivery data return including Getting Building Fund (GBF). BEIS will incorporate this into their assessment once all data returns have been submitted on 26 February 2021 to give a final rating.
Conclusion
There has been a very strong start to the final and most challenging year of the LGF programme in terms of financial performance. Having overachieved in each of the first three quarters of the year, there is less than £9m remaining to ensure that the LGF programme is fully expended by 31 March 2021. This strong delivery performance has contributed to the initial results of the APR review that GBSLEP is meeting Government expectations on Governance, Strategic Impact and Funding Delivery. Mitigation measures are proposed to ensure that slippages to project spend before the end of 31 March 2021 are managed through the freedoms and flexibilities which are available to the LEP to manage capital budgets between programmes.
Page 23 of 83 Item 5 There have been no further delays reported from those projects with contracts currently underway, following the continuation of the national lockdown and the introduction of BREXIT. This will be kept under close review by the Programme Delivery Team. In addition, the remaining task is to ensure that the LGF programme is closed-off in a timely manner and that monitoring and evaluation of the programme can commence to ensure the outputs and outcomes which Government has funded are delivered.
Report by: Kerry Billington, Interim Programme Consultant Contact: [email protected]
Date Created: 19 February 2021
Reviewed By: Christian Cadwallader, Interim Programme Consultant Keith Mitchell, Interim Finance Consultant
Date Reviewed: 23 February 2021
Page 24 of 83 Item 6
9 GREATER BIRMINGHAM AND SOLIHULL LEP PROGRAMME DELIVERY BOARD
3 MARCH 2021
GETTING BUILDING FUND PROGRAMME UPDATE
Recommendations The GBSLEP Programme Delivery Board is requested to: 1. Note the progress of the Getting Building Fund Programme and financial performance for 2020/21 to date; and 2. Note the progress of the projects allocated to the Getting Building Fund (GBF) against the GBSLEP allocation. Background 3. In June 2020, the Secretary of State for the Ministry of Housing, Communities and Local Government (MHCLG) wrote to LEPs and Mayoral Combined Authorities (MCAs) outlining the opportunity to pitch for funding for capital projects to stimulate the economy. 4. Two categories of projects were asked for: • Existing Government funded capital projects which could be accelerated to generate new activity within 18 months, to help create jobs and raise demand in the economy; and • Shovel ready capital projects that can be delivered in 18 months which will drive economic growth and jobs and support the green recovery. 5. Priorities for investment were outlined as town and city centre modernisation, physical connectivity, innovation ecosystems, improvements to human capital and digital connectivity. The deadline for submissions was 18 June 2020. 6. On 1 July 2020, LEPs and MCAs received letters from Ministers outlining the local allocation of this fund, based on a per capita allocation with a weighting applied for COVID-19 exposure, resilience and levelling up. The letter sent by the Secretary of State to the Mayor and the three LEP Chairs set out that the WMCA area would receive up to £66m. The area covered by this allocation is the seven Metropolitan authorities of Birmingham, Coventry, Dudley, Sandwell, Solihull, Walsall and Wolverhampton. 7. No funding relating to district and borough authorities is included in this allocation. The funding for these areas has been included within the allocations for Worcestershire LEP (£12m) and Stoke & Staffordshire LEP (£23.7m). Decisions relating to the allocation of this funding will be managed by those LEPs only. Warwickshire will separately receive up to £8.1m which will be managed by Coventry & Warwickshire LEP. 8. A single return for the £66m from the West Midlands was submitted to Government on 17 July 2020.
GBSLEP Allocation 9. From the return submitted for the £66m Getting Building Fund (GBF) allocation, two projects are located in the GBSLEP area. These are the University Station project and the Precision Health Technology Accelerator (PHTA) project. The funding allocated to the GBSLEP to deliver these two projects via the WMCA is £14.83m, made up of £3.97m for University Station and £10.86m for PHTA. University Station also has £11.14 GBF
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awarded directly to the WMCA to support its delivery. The WM5G 5G Application Accelerator project will remain with the WMCA to deliver across the region but does also cover the GBSLEP area. 10. The £66m funding will be paid to WMCA from MHCLG with a back-to-back agreement for the £14.83m funding from WMCA to GBSLEP. This back-to-back agreement has now been signed which now enables GBSLEP to contract with the project sponsors for the grant funding to deliver the two projects detailed above and secure the outcomes as baselined in the BEIS Q2 20/21 forecast monitoring return. 11. The £14.83m is paid in two tranches: tranche one of £7.94m was received on 10 December 2020 with tranche two expected in April 2021 (within seven days of WMCA receiving it from MHCLG). The amounts to support the capital projects are shown in the Table 1 below as follows:
Project 20/21 Grant (£m) 21/22 Grant (£m) Total (£m) (Tranche One) (Tranche Two)
University Station 2.64 1.33 3.97
PHTA 5.26 5.60 10.86
Total 7.90 6.93 14.83
Table 1 – GBF Project Annual Allocation 12. In the tranche one monies received, an amount of £25,000 is revenue funding and the balance of £12,625 is contingency funding. The revenue funding is to fund programme and project management costs to support the delivery of the programme and the contingency can be used in the delivery programme or to fund other capitalised costs associated with delivering the programme. 13. The freedom and flexibilities which the Accountable Body has, in order to be able to manage the capital budgets between programmes, also applies to this funding. All funding has to be expended by 31 March 2022 and any formal changes must be made in writing to the WMCA and agreed via a change request with the relevant Government Department. 14. The outputs have been apportioned across the LGF and GBF programmes on the basis of the percentage grant allocated from each fund in order to avoid double counting. Since the original submission to WMCA, the overall number of outputs/outcomes are still expected to be achieved for each project as a whole, with the exception of construction jobs, which has been recalculated on the PHTA project resulting in an overall decrease. This change was captured in the Q2 baseline submission to BEIS. 15. Details of the latest outputs/outcomes attributable to GBF are shown in Table 2 below. The figures shown in brackets are the number estimated to complete by 31 March 2025 with most of the PHTA outcomes being realised after the PHTA building has been completed and becomes operational.
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University Station PHTA
Forecast at Latest Forecast at Latest Submission Project Submission Project Forecast Forecast Output/Outcomes (To 2025) (To 2025)
389 Direct Jobs Created 30 20 502 (44)
Construction Jobs Created 100 100 498 310
Commercial Space Unlocked 1,585 2,049 11,100 8,610 (sqm) No of businesses / institutions 741 0 0 955 assisted (62) Area of new/ improved 0 0 147 114 learning/training floorspace 838 No of new learners assisted 0 0 1,080 (31)
No of retrofits delivered 1 1 0 0
CO2 Emissions Avoided (kg) 1,183,876 1,183,876 0 0
Public Realm or Greenspace 5,000 5,000 0 0 improved or created (sqm)
Table 2 - GBF Project Outputs/Outcomes
Financial Performance 16. To date, there has been no grant paid out this financial year. The latest forecast grant profile for the two projects is shown below in Table 3. This revised profile was submitted as part of the quarter two monitoring return to BEIS to re-baseline the grant profile.
Project 20/21 20/21 20/21 21/22 21/22 20/21 Total Grant Change Outturn1 Grant Change Outturn1 (£m) (£m) (£m) (£m) (£m) (£m) (£m)
University 3.97 1.33 3.97 0 (1.33) 0 3.97 Station1
PHTA 0 (5.26) 3.93 10.86 5.26 6.93 10.86
Total 3.97 (3.93) 7.90 10.86 3.93 6.93 14.83 Table 3 – Latest Forecast Project Grant Profiles
17. Table 3 above shows that the forecast grant profile for 2020/21 has slipped by £3.93m. This slippage in project spend will be managed using the programmes ‘freedom and flexibilities’ granted to the Accountable Body, to ensure that the grant awarded to 31 March 2021 will be expended by that date (compared to the profile in Table 1 above).
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Update on Projects 18. Updates on the progress of these projects against this programme are reported to PDB and quarterly progress reports are also required by WMCA and BEIS.
Precision Health Technology Accelerator 19. The Full Business Case (FBC) for PHTA was considered at PDB (2 September 2020) and the GBSLEP Board (24 September 2020) approved the investment of £14m grant towards the £94m life science project. This will create 11,000 sqm innovation space in a building which will be the catalyst for the wider four-hectare Birmingham Health Innovation Campus. 20. The £3.14m balance of the £14m grant (£10.86m GBF), is funded through the LGF. The LGF grant must be drawn down by 31 March 2021 whilst the GBF element has until 31 March 2022. Grant agreements for both funding sources have been finalised and with the University of Birmingham to agree and sign. 21. The development of the campus will be delivered through long-term collaboration between the University and a leading property provider for the science and technology sector, Bruntwood SciTech (a 50/50 joint venture between Bruntwood and Legal & General). 22. The planning application for the enabling works comprising earthworks and site levelling, drainage infrastructure, erection of a primary substation, site compound, site access road and temporary surface and car park to base course and below ground services and associated development, was submitted by Bruntwood SciTech on 8 October 2020. Consent was given to this on 2 February 2021 with works underway to develop a materials management plan (condition of planning). Enabling works will commence once this been approved by BCC. 23. Site investigations works have been completed with the report issued and the interim water management process has been implemented and is continuing to work effectively. The full (hybrid) planning application was submitted in mid-December 2020 and there has been positive feedback following the formal consultation, which is on target for determination in April 2021, with the building remaining on schedule to be completed by Spring 2023.
Image of PHTA Building on completion On site water levels
University Station 24. The FBC for University Station was approved at PDB (28 July 2020) for a total grant of £8m (which includes £2m development costs previously approved and claimed) towards the £56m total project cost. Approval was provided for a combination of LGF and Growing Places Fund funding with delegated authority given to the GBSLEP Director to determine the most advantageous source of capital funding to be utilised. The outcome of the GBF
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application for funding was unknown at the time of the PDB decision. 25. As a result, this project is now being funded through a combination of GBF £3.97m and LGF £4.03m funding (including £2.0m development funding) and grant agreements have been prepared to reflect this. The grant agreement for the LGF funding has been executed and claimed (Q2 2020/21), and in reference to para. 14 of this report, outputs and outcomes have been proportionately reduced to reflect the GBF funding of the project. Project delivery is now progressing in accordance with the submitted programme and the construction contractor, VolkerFitzpatrick, is progressing with vegetation clearance, site surveys and compound set-up. The GBF grant agreement has been finalised and will be signed in Q4 and a full claim made in accordance with the forecast in Table 3 above.
University Station - before and after photographs with illustrative plan
Conclusion 26. The WMCA and the three West Midlands LEPs were allocated £66m from the recent £900m Getting Building Fund. Of this, GBSLEP has been allocated £14.83m to contribute to the delivery of two key schemes for the area, namely University Station and PHTA. 27. Progress is being made on both projects with no issues currently identified that may impact on their ability to draw down the GBF grant in full by 31 March 2022. However, the delays to the start of the PHTA project has meant the grant drawdown profile has slipped and freedom and flexibilities will be required to manage achievement of the agreed grant profile for 31 March 2021. Progress reports on these two projects will be regularly reported to PDB, the WMCA and BEIS.
Page 29 of 83 Item 6
Report by: Kerry Billington, Interim Programme Consultant
Prepared: 16 February 2021
Contact: [email protected]
Reviewed by: Christian Cadwallader, Consultant Programme Manager
Date Reviewed: 18 February 2021
Page 30 of 83 Item 7
GREATER BIRMINGHAM AND SOLIHULL LOCAL ENTERPRISE PARTNERSHIP PROGRAMME DELIVERY BOARD 3 MARCH 2021
LOCAL GROWTH FUND (DEPARTMENT FOR TRANSPORT RETURNED) FUNDING
Recommendations The Programme Delivery Board (PDB) is requested to: Note progress of the £21.851m Local Growth Fund (Department for Transport Returned) grant funding and approval of projects; and Note the approval by BEIS to roll over circa. £3.56m of the funding to 30 June 2021 and the mitigation measures being implemented by the Programme Delivery Team.
Background The Department for Transport (DfT) was notified in July 2020 of the decision to accept £21.85m of Growth Deal funding previously allocated by DfT to the A457 Dudley Road scheme, back into the Local Growth Fund. The grant agreement to formally accept the funding by BCC as the LEP’s Accountable Body was signed and the funding was paid to BCC on 3 September. The funding has the same conditions as the LGF programme and therefore has to be expended in full by 31 March 2021. With the support of a sub-group of Programme Delivery Board to consider and prioritise projects for investment to ensure they will both deliver in time to draw down this grant funding and achieve value for money, there has been significant progress made towards this.
Programme Update Following approvals of OBC and FBC’s, the programme of £21.851m is fully approved funding. The list of projects together with their current contractual status is shown in Table 1 below:
Project Name Grant Contractual Amount Status (£m)
University Station £0.700 Contracted
Precision Health Technology Accelerator £1.199 Awaiting signature
A457 Dudley Road £5.043 Draft Grant Agreement
Enterprise Wharf £5.000 Contracted
Perry Barr Phase II £1.600 Contracted
Open House, the REP £0.150 Contracted
Tyseley Incubator for Clean Energy (TICE) Phase 1 £0.892 Contracted
Tyseley Incubator for Clean Energy (TICE) Phase 2 £0.020 Contracted
Page 31 of 83 Item 7 Project Name Grant Contractual Amount Status (£m)
Urban Carbon balancing Using Biochar £0.306 Awaiting signature
Surge £0.546 Awaiting signature
Junction Works £0.325 Final contract agreed
Institute of Technology £1.680 Awaiting signature
Cadbury College STEAM Phase 1 £1.766 Contracted
Lichfield Motion Capture Performance & VR Studio £0.337 Awaiting signature
Hippodrome Access All Areas Phase One £0.718 Development Funding Agreement Signed, Draft Grant Agreement
Hagley Road SPRINT Phase II £0.230 Draft development funding agreement
NEC Longabout £0.460 Awaiting signature
Connected Autonomous Mobility £0.250 Awaiting signature
BMet Built Environment (Site Management) £0.060 Awaiting signature Academy
Creative Content Hub £0.227 Draft Grant Agreement
Programme Management Levy £0.342 Contracted
TOTAL £21.851
Table 1 – Approved Grant Investment in Projects and Contractual Status The approved projects, excluding Creative Content Hub as the apportionment across the LGF and GPF programme needs to be agreed, will lead to additional outputs and outcomes estimated as follows: • 1,897 new/safeguarded jobs; • 12,008 sqm new/refurbished commercial floorspace; • 1,931 new learners; and • 4,895 sqm new/refurbished learning/training floorspace. All other projects which the Programme Delivery Team has been working with to bring forward OBC and FBC’s for consideration to take up the LGF (DfT) grant will remain on the GBSLEP Programme Pipeline to be in a position to take up any future funding opportunities, along with other projects which are being reviewed for inclusion on the pipeline. An update on this will be brought to the next PDB meeting. Following the Spending Review announcement on 25 November 2020, it is likely that funding may become available from 1 April 2021 from the £4bn Levelling Up Fund and the UK Shared Prosperity Fund. Prospectuses were due to be launched in January 2021 but are now not expected until the Budget announcement in March 2021.
Page 32 of 83 Item 7 The Levelling Up Fund is jointly held by DfT, MHCLG and BEIS. It will fund infrastructure projects up to the value of £20m with £600m expected to be available in 2021 and MPs will have a role in approving projects. The UK Shared Prosperity Fund (UK SPF) is UK wide funding amounting to an expected £1.5bn per year on average, matching receipts from EU structural funds.
Financial Performance for 2020-21 Actual grant of £0.850m has been paid out in Q2 (University Station £0.700m and Open House, The REP £0.150m). A claim for £0.150m development funding (Cadbury STEAM) has been paid out in Q3 and a claim for programme management levy has been raised for Q3 totaling £0.166m. Claims have been received for £1.600m for the Perry Barr project and £0.07m for the TICE Phase 1 project. This will bring the total grant to date paid out to £2.836m and represents 13% of the £21.851m programme total. Due to the tight timescales to approve, contract and expend the £21.851m grant in full by 31 March 2021, discussions have taken place with BEIS to request that up to £3.556m could be carried over to 30 June 2021 of this programme to mitigate any risks of projects not being able to draw down their grant claims in full by 31 March 2021. Formal approval to this has now been received from BEIS on 24 February 2021. Discussion have taken place with each of the project sponsors and the projects requesting approval to carry over grant funding to 30 June 2021 is detailed below in Table 2:
Project Name Grant Grant to be Amount carried over to (£m) 30 June 2021 (£m)
A457 Dudley Road £5.043 £0.150
Enterprise Wharf £5.000 £2.500
Tyseley Incubator for Clean Energy (TICE) Phase 1 £0.892 £0.065
Urban Carbon balancing Using Biochar £0.306 £0.040
Junction Works £0.325 £0.200
Lichfield Motion Capture Performance & VR Studio £0.337 £0.120
Hippodrome Access All Areas Phase One £0.718 £0.200
NEC Longabout £0.460 £0.100
Creative Content Hub £0.227 £0.150
Programme Management Levy £0.342 £0.031
TOTAL £3.556
Table 2: Latest Estimate of Grant Funding to be Carried over to 30 June 2021
Page 33 of 83 Item 7 Risks and Issues It has always been reported that this funding returned to the LGF programme was a great opportunity to support additional projects which the LEP otherwise could not support this financial year. However, the approval and agreement of final contracts with project sponsors has taken some time to complete. This has been a resource intensive exercise, in which the Programme Delivery Team has been supported by BCC, and a lot of grant agreements are either completed, finalised awaiting signature or nearing finalisation in order that they can be signed and completed. The greatest risk to the programme has always been that all the £21.851m grant is not expended in full by 31 March 2021. A number of projects are reporting delays to their programme because of the time taken to get the grant contracted with the LEP. This has been discussed with BEIS and a request of up to a maximum of £3.556m grant to carry forward into the 30 June 2021. Formal agreement to this has now been received from BEIS. This flexibility can now be formally agreed with individual project sponsors and reflected in grant agreements. The £2.5m grant has already been formally agreed on the Enterprise Wharf project. The latest estimates of carry over grant requirements for the other projects is shown in Table 2 above. This will be subject to final agreement over the next two weeks before being formally agreed with each project sponsor. Any further slippage reported to the end of March 2021 would need to utilise the use of the programme “freedoms and flexibilities” granted to the Accountable Body, but currently this is not expected to be required. Conclusion Acceptance of the returned DfT funding has provided a great opportunity to support a number of projects at this time but the challenge to contract and spend this funding by 31 March 2021 has always been highlighted. Great progress continues to be made by the Programme Delivery Team supported by BCC with over all of this funding now approved good progress in contracting the full programme amount. GBSLEP is in an excellent position to successfully deliver this in a timely manner utilising the extension to 30 June 2021 for £3.556m of the grant. The use of the programme “freedoms and flexibilities” granted to the Accountable Body may need to be utilised if there is any further unexpected delays in project delivery. The Programme Delivery Team will continue to work with Project Sponsors to promote and develop any projects which are not able to proceed at this time due to availability of funding. This will give GBSLEP a more robustly developed pipeline which is ready to respond to the Levelling Up Fund and UK Shared Prosperity Fund funding opportunities announced as part of the Spending Review on 25 November 2020. The prospectuses to these are expected as part of the Budget announcement on 3 March 2021.
Report By: Kerry Billington, Interim Programme Consultant Contact: [email protected]
Date Created: 21 February 2021
Reviewed by: Christian Cadwallader, Interim Programme Consultant Keith Mitchell, Interim Finance Consultant Date: 24 February 2021
Page 34 of 83 Paper partially Exempt from Publication under Clause 3 of Section12A of the Item 8 Local Government Act 1972
GREATER BIRMINGHAM AND SOLIHULL LEP PROGRAMME DELIVERY BOARD 3 MARCH 2021 ENTERPRISE ZONE PROGRAMME UPDATE
Recommendations The GBSLEP Programme Delivery Board is requested to: 1. Note the Enterprise Zone Programme Project Q3 Updates; and 2. Note the Enterprise Zone Capital Programme Financial Update.
EZ Programme Project Q3 Update 3. The Enterprise Zone is currently supporting a number of capital projects. The status of these are as follows (notable changes only): 4. Snow Hill Public Realm (Delivery) EZ Investment £2.90m. The Snow Hill Public Realm scheme will introduce high quality public realm improvements and highway interventions to local streets and spaces in the Colmore Business District. Update: Project 2.2 (Edmund Street) due to commence works April 2021. Project 2.3 (Steel House Square) is due to commence on site Autumn 2021. 5. Curzon Metro Stop (Delivery) EZ Investment £9.00m. Supporting delivery of HS2 and the integration of the Metro with the station. Update: Contract award still scheduled June 2021. 6. Old Curzon Station (Delivery) EZ Investment £2.00m. The project is being promoted by a partnership which includes High Speed 2 Ltd., who are committing £3.6m of funding and will deliver the refurbishment works. Update: Work has now commenced on site. 7. Digbeth High Street (OBC Approved) EZ Capital Investment £15.72m. Digbeth High Street is a catalyst for development and private sector investment, supporting both the realignment of the METRO to facilitate improved public realm and create enhanced public spaces. Update: Investment report being presented to PDB (3 March 2021) and Board in April 2021 (subject to PDB approval). 8. Southside Public Realm (OBC Approved, shown opposite) EZ Capital Investment £9.56m. The Southside improvement scheme is to transform the Southside area into the new “front-door” of Birmingham City Centre. Update: FBC approved PDB February 2021. Due to commence on site April 2021. 9. Belmont Works (Delivery) EZ Capital Investment £2.45m. Located at Eastside Locks the £57.90m comprehensive conversion/refurbishment of the Locally Listed Belmont Works; loan to help fund the construction of a new multi-use office building (Steamhouse). Update: Minor delays to works due to C19 still reported and a two/three-month delay to the overall practical Page 35 of 83 Paper partially Exempt from Publication under Clause 3 of Section12A of the Item 8 Local Government Act 1972
completion (now anticipated Q3 2021/22). 10. Curzon Station Environment (Development) EZ Investment £26.17m. The project comprises two different public realm schemes, known individually as Curzon Promenade and Paternoster Place and will be delivered by HS2. Update: Change request approved at February 2021 PDB and FBC due December 2021. 11. Moor Street Queensway (Development) EZ Investment to date £0.2m (Revenue). Interim project due to be completed by Spring 2021, final scheme scheduled for 2027. Update: OBC due to be submitted Q1 2021/22. FBC programmed for December 2023.
Paradise Phases and PwC Update (EZ Investment £139.07m) 12. Phase One: Complete. No further updates. Project evaluation requested. 13. Phase Two: Progressing well, with the planning application for the Octagon Build-To-Rent (BTR) residential tower expected to be considered at Planning Committee in March 2021. Pre-application discussions with BCC Planning for the high-quality, mid-sized (152 room) boutique hotel remain a priority with focus on the design treatment of the facade and achieving the correct massing. Occupier interest in both phase one and phase two remains strong with a pending announcement of a number of new lettings (both office occupiers and food/beverage) during Q4 2020/2021. 14. Phase Three (EZ Investment Requested £54.3m): GBSLEP has received the Phase Three Interim Business Case and the Independent Technical Evaluation has commenced. An initial review of the business case has been completed and the draft report is expected in circa. 4-5 weeks. It is provisionally scheduled for PDB on 31 March 2021, but it is likely that this could be delayed to the next meeting on 16 May 2021.
Birmingham Smithfield (Development) EZ Investment £131.4m 15. Development Funding (Change Request): BCC has submitted a change request for additional funding to support the delivery of the Birmingham Smithfield project and is included on the PDB agenda for this meeting. 16. Developer Agreement: The dashboard in Appendix A references key milestones that have been achieved and are due to be achieved in the coming month. However, it does not highlight the on-going work to finalise the JVA and the associated documents. Regular meetings are occurring between BCC, Lendlease and their appointed legal consultants and there are still a small number of specific points of principle to be agreed. It is envisaged that the final outstanding points will be agreed week commencing 22 February after which, once the legal advisors have finalised the drafting and internal approvals have been sought from both BCC and Lendlease, the documents will be engrossed. In order to expedite the process, BCC Officers and Council Members have been briefed on the proposed terms in anticipation of finalising the primary legal agreements. 17. Enabling Works/Commonwealth Games: BCC has issued a draft Outline Business Case with a revised programme for submission of the OBC and FBC. It is anticipated that the technical evaluation of the OBC will be completed in time for a 31 March 2021 submission to PDB for consideration. 18. Project Dashboard / Project Roadmap: The February 2021 Smithfield Dashboard is included in Appendix A and Project Road Map included in Appendix B. Martineau Galleries (Not in EZ Investment Plan, Investment Requested circa. £70m) 19. The Project Sponsor has submitted an Outline Business Case which is currently being evaluated by the GBSLEP independent technical advisors. This will likely be available for consideration by PDB in May 2021. It is proposed that the Martineau Galleries team present the proposal to PDB at 31 March 2021 PDB in anticipation of the submission in May.
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EZ Performance Data Update (Q3, 2020/21) 20. The overall performance data position for the Enterprise Zone Programme for Q3, 2020/21 remains unchanged as in Table 1.0 below:
Output / Outcome Jobs Land Floorspace Total EZ Private Created Reclaimed Created / Investment Sector (no) and Made Refurbished (23/01/21 Investment Ready (ha) (sqm) model) Forecast to 2045/2046 71,796 60 1,100,000 £1.53bn £3.90bn Previously Reported (Q2) 6,657 19.4 270,985 £161.2m £825.7m Actual achieved to date 6,657 19.4 270,985 £161.2m £834.7m % Actual achieved to date of 9.3% 32.3% 24.6% 10.7% 21.4% the forecast to 2046 Table 1.0 Performance Data (Actual Achieved to 2020/21 Q3)
EZ Model Financial Position
Background 21. Enterprise Zone activity is funded by prudential borrowing on behalf of the GBSLEP which is repaid from the uplift in business rates generated by new commercial development. 22. The latest Q3 financial model updated in January 2021 and presented to PDB, confirmed that the end of year surplus position for 2020/21 was anticipated to be slightly reduced from £4.8m to £4.4m. There is no change to report on the financial position. Capital Project Spend (Increased to Five Years) 23. The forecast capital project spend is shown in Table 2.0 and includes a forecast to 2025/26 with the inclusion of the total investment as specified in the Enterprise Zone Investment Plan May 2019. Project expenditure up to March 2020 was £154.2m and forecast to increase by £24.9m in 2020/21. Capitalised interest and capitalised revenue costs account for £5.4m and the Paradise Phase One and Two £15.3m. 24. Birmingham Smithfield is currently included in the financial model following approval of the Enterprise Zone Investment Plan in 2019, however it is the intention to allocate the funding to the final year of the programme, 2045/46, and other projects which have not yet reached or achieved Outline Business Case approval, in order to comply with the approved EZ financial principles. 25. The current EZ financial model demonstrates an increasing cumulative surplus, based on the current programme, from £3.4m in 2021/22 to £31.7m in 2025/26. This is also assuming that annual business rates income increases from £10.7m in 2021/22 to £41.8m in 2025/26. As previously reported, the cumulative forecast surplus for the EZ programme, remains at £544.7m assuming all anticipated business rates income is received.
Programme Project Schedule 26. The following projects are scheduled for submission to Programme Delivery Board: a. Curzon Public Realm, FBC (Q4 2021/22); b. Moor Street Queensway, OBC (Q1 2021/22) FBC (Q3 2024/25) c. Birmingham Smithfield, Enabling Works OBC (Q4 2020/21, FBC (Q1 2021/22) d. Birmingham Smithfield, OBC (Q4 2021/22), FBC (Q3 2022/23) e. Paradise Phase Three, IBC (Q4 2020/21), FBC Q2 (2022/23) As previously reported, and included above, three significant projects (Smithfield Enabling Works (OBC), Paradise Phase Three Interim Business Case (IBC) and Martineau Galleries OBC) are currently having business cases reviewed by GBSLEP and will be presented to both PDB and Board over the next three months. EZ financial model affordability will likely be a key factor in the determination of the business cases when considering investment from the programme. Page 37 of 83 Paper partially Exempt from Publication under Clause 3 of Section12A of the Local Item 8 Government Act 1972
TABLE 2.0 5 Year Forecast Forecast TOTAL EZIP Annual Capital Project Spend Forecasts - Next 5 years 2020/21 (Q3) 2021/22 2022/23 2023/24 2024/25 2025/26 Forecast Total Capital Spend to March 2020: £154.25m £m £m £m Paradise Circus Phase 1&2 15.3 23.0 2.0 2.6 - - 139.1 Site Development & Access - including Belmont Works - 2.5 - - - - 5.8 Smithfield (OBC not approved) - 4.0 10.7 19.6 25.8 11.6 150.5 Metro Extension & Centenary Square TFWM - 4.5 - - - - 31.7 CEC Southside Public Realm 2.5 4.1 0.2 - - - 9.1 CEC Snow Hill Public Realm - 1.3 0.4 0.9 - - 2.9 CEC Ashted Circus 0.2 - - - - - 1.5 CEC balance ------3.7 HS2 Station - Curzon Metro Stop 0.9 - - - - 8.0 9.0 HS2 Station - Curzon Station Environment 0.2 0.2 0.1 0.1 5.7 11.6 26.3 HS2 Station - Moor St & Station Square (OBC not approved) - - 0.1 0.2 8.0 7.2 24.7 Digbeth Public Realm 0.4 - 15.6 1.7 2.0 2.0 86.4 Site Enabling Works - Old Curzon Station Building - 2.0 - - - - 2.0
Site Enabling Works Programme ------99.5 LEP Investment Fund - - - - 5.0 5.0 20.0 New Wholesale Market (WSM) ------10.0 HS2 Interchange site ------20.0 Local Transport Improvements ------104.8 Connecting Economic Opportunities (CEC) Phase 2 ------52.9 Metro Extension to East Birmingham/Solihull ------183.3
Capitalised PM revenue costs 0.8 0.5 0.5 0.5 - - 2.2 Capitalised Interest 4.6 1.9 3.0 4.0 5.0 2.3 36.0
Total Capital Spend Forecast (@ Q3 20/21) 24.9 44.0 32.6 29.6 51.5 47.7 1,021.4 Table 2.0 Anticipated Capital Project Spend (Five Years)
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Conclusion 27. Whilst there is currently no reported change, or potential change to the financial model, the programme remains amber for the reasons previously reported. This will be reviewed at the end of Q4 which should also include the initial feedback on the business rates scenario modelling which commenced in December 2020. Report by: Christian Cadwallader, Consultant Programme Contact: Manager [email protected] Date Created: 23 February 2021
Reviewed by: Keith Mitchell, Finance Consultant
Appendices A Birmingham Smithfield Dashboard (February 2021) B Exempt from Publication under Clause 3 of Section 12A of the Local Government Act 1972.
Page 39 of 83 Paper partially Exempt from Publication under Clause 3 of Section12A of the Local Item 8 Government Act 1972 APPENDIX A – Birmingham Smithfield Dashboard (Feb 2021)
Page 40 of 83 Item 10a
GREATER BIRMINGHAM AND SOLIHULL PROGRAMME DELIVERY BOARD 03 MARCH 2021 ENTERPRISE ZONE INVESTMENT REPORT - DIGBETH PUBLIC REALM PHASE ONE (FBC)
Recommendation
The GBSLEP Programme Delivery Board is requested to:
1. Recommend the investment to GBSLEP Board of £15,720,000 (fifteen million seven hundred and twenty thousand pounds) of Enterprise Zone Funding (EZF) capital grant towards the delivery of the £17,512,000 Digbeth Public Realm Phase One (DPRP) project. This is in accordance with the Greater Birmingham and Solihull LEP (GBSLEP) Assurance Framework following the submission of a Full Business Case (FBC) and the Independent Technical Evaluation (ITE) received on 22 February 2021.
Background 2. Digbeth Public Realm Phase One is identified in the Enterprise Zone Investment Plan as a four-phase project and recognised for its importance to attract investment in the Curzon area. Birmingham City Council (BCC) previously secured EZ funding of £792,000 towards the development of the FBC, which has also facilitated a full review of Digbeth High Street, including the public realm, Metro and transport integration. The OBC was approved on 24 June 2020 by GBSLEP Board in accordance with the GBSLEP Assurance Framework. 3. The FBC proposes to deliver elements of the Metro route, including the Digbeth High Street public realm works, by early 2022/2023. This will be ahead of the Commonwealth Games with the remainder of the route is to be completed in line with the HS2 construction schedule highlighted in section 12. 4. The vision for Digbeth High Street is to create an attractive, vibrant and pedestrian- friendly destination by: . Creating an individual identity that supports and protects the current creative arts and heritage as well as future regeneration proposals; . Reducing car dominance, to create an integrated, efficient and reliable sustainable transport corridor; and . Recognising the role of Digbeth High Street as a place to work, live and visit as well as a link, allowing access to those road users who need it. Case for Change 5. Digbeth High Street is currently dominated by pedestrian barriers, crossing points over six lanes of traffic and is a key investment priority for supporting local growth. In addition, many sites along, and in the vicinity of Digbeth High Street, are underutilised and have not fully benefited from the natural growth of the City Core, leaving pockets of activity isolated and with relatively low footfall.
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6. The Digbeth Public Realm project aims to create world class walking and cycling public realm. Delivered by Transport for West Midlands, via the Midland Metro Alliance, (prior to the 2022 Commonwealth Games) the project will help maximise the impact of HS2 by creating an environment that is attractive to residents, businesses and visitors. 7. The extension and integration of the Birmingham Eastside Extension (BEE) Metro also creates an important catalyst, necessitating the redevelopment of the High Street urban public realm to capitalise on this investment opportunity. The rationalisation of highways, bus, Sprint and tram lanes, cycle paths and pedestrian areas will help transform the public realm of Digbeth High Street into an attractive, vibrant and pedestrian-friendly destination. The objectives are to: . Create a strong identity and character for the High Street’s urban realm and its surrounding quarter; . Improve the current harmonious street furniture and conserve the industrial architectural heritage; . Enhance the pedestrian realm and improve cycle access and cycle parking along the corridor; . To provide an integrated, reliable and sustainable transport corridor and reduce car traffic volumes along the High Street; . Enhance road safety and improve the personal security of people along the High Street; . Provide car parking and access to the High Street’s frontages; . Enhance the quality of the physical environment and create a high-quality open space network; and . Conserve and develop local animations at different times of the day/year. 8. Having considered all the benefits and rationale for carrying out the public realm improvement works it should be noted that circa. £11.5 million of the project will be invested in the realignment of the Metro to facilitate the space required to deliver the increase in public realm. 9. A benefits appraisal has been carried out to allow for the impact of the scheme to be measured, and it identified a total of £50.8m scheme life benefits. On this occasion the disbenefits of the highway assessment have been excluded (treated separately) from the Value for Money (VfM) assessment of the scheme as the reduction on public highway is to
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enable bus and tram priorities rather than the positive impact of the public realm works and will be considered as part of the Birmingham Eastside Extension project. The resulting Benefit Cost Ratio (BCR) has been calculated as 3.66 based on a Present Value Cost (PVC) of £10.59m. This represents high value for money.
Business Case Review 10. An Independent Technical Evaluation has been undertaken and identified no category red issues and six category amber issues. A summary of the ITE is included below: . The Strategic Case presents the rationale for the project in detail based on clear evidence of need and strong alignment with local and national policy objectives. The scope of the scheme has been well defined, and a detailed design brief has been provided to show the extent of the public realm improvements. . The Economic Case presents the process used to develop a long list of options and sift them down to a shortlist of three public realm options. The selection of the preferred option is then based on a number of design and delivery criteria. No economic appraisal of the alternative short-listed options is provided, the cost-benefit analysis is only presented for the Preferred Option. Based on the current approach, the Preferred Option BCR is 3.66 which represents high value for money under DfT guidance. However, when the appraisal period is reduced to 30 years, this subsequently reduces the BCR to 2.14. . The Financial Case presents the costs estimates for the project, based on detailed designs. AECOM’s Cost Consultants reviewed the scheme’s costs and found them reasonable. It is worth noting that target cost has been slightly delayed. The applicant estimates that this is unlikely to have material impacts on the programme or the scheme’s costs. They have provided information on how they will manage potential increases in costs. All costs are expected to be incurred between April 2021 and April 2022 as highlighted in the financial programme in Table 1.0. GBSLEP funding will be covering 100% of the capital costs for the public realm improvements while BCC will be responsible for on-going maintenance costs. Further information on how maintenance costs and the sources of revenue (CIL / S106) which will cover them have been estimated and should be provided along with formal confirmation by BCC that they will be liable for this funding. The financial case identifies the key financial risks to the scheme, including not securing GBSLEP funding and project delays resulting in increased costs. WCMA’s legal team reviewed the project’s State Aid position and concluded there were no issues. . The Commercial Case provides details of the contractual and procurement approach to the scheme. The scheme will be delivered by the Midland Metro Alliance (MMA), which is an established partnership between the WMCA, the design consortium of Egis, Tony Gee and Pell Frischmann and contractor Colas Rail. It will operate with a shared risk arrangement or sharing pain/gain to ensure all parties are equitably incentivised to perform beyond the expectation of the agreed target cost. No major contractual issues have been identified. Two risk registers have been provided, one for the full BEE scheme and one for the Public Realm project, setting out the risks, their likelihood and effects, mitigation measures and risk owners. . The Management Case outlines the scheme’s programme, governance arrangements, risks to delivery and track record. The only outstanding consent is the planning submission for planning conditions relating to the Digbeth High Street section of BEE which is scheduled for 14 April 2021. 11. Of the two amber issues highlighted in the evaluation, the decrease in the BCR (as highlighted above) as a result of the reduced evaluation period should be noted and the other relates to the potential disbenefit as a result of the impact on road users which could have a further negative impact on the BCR. Whilst both have been considered, the project BCR will very likely remain high.
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12. In addition to the above, confirmation by BCC that the maintenance of the public realm will be an obligation of the City Council and that sufficient funding is allocated (£1,000,000). Evidence in the form of an approved Cabinet report will be a condition of the grant the LEP Executive will be working with BCC to ensure that all the above information is submitted or resolved prior to the Service Level Agreement being signed.
Programme Milestones 13. The Project Sponsor has provided a detailed programme for the works and is working towards appointing a Main Works Contractor by March 2021 to complete in time for the Commonwealth Games in 2022. 14. The key milestones are shown below: . Planning consent, 14 April 2021 . Utility Diversions, commenced for completion, May 2021 . Section 5 Works, May 2021 . Planning Conditions Approval, June 2021 . Section 5 Handover to WMCA, April 2022 . Full BEE completion, September 2024
Funding Profile 15. The FBC contains an application for £15,720,000 Enterprise Zone funding towards the total anticipated capital cost (based on the scheme construction cost estimate produced in 2019 Q1 prices) with forecast inflation accounted for using BCIS construction inflation estimates. 16. The project funding profile is set out in table 1.0 below:
Previous Future Years 2019/20 2020/21 2021/22 2022/23 Years Total
Capital funding (£000’s) GBSLEP EZ Grant funding - - - - 15,720 - 15,720 requested
GBSLEP EZ Development 130 323 339 - - - 792 funding
Total capital cost 130 323 339 - 15,720 - 16,512
Revenue funding (£000’s) Local Authority - - - - - 1,000 1,000 contribution (S106) Total revenue cost - - - - - 1,000 1,000 Total Project Cost 17,512
Table 1.0 Project Capital and Revenue Costs
17. There is no capital match funding for the project being provided by the Project Sponsor, however revenue funding will be allocated from S106 resources. 18. Match funding for the broader Digbeth High Street project is being provided by TfWM within the overall £227.2 million funding for the West Midlands Metro Eastside Extension, which will fund the base scheme referred to in the background above. Subject to the current funding applications being considered via GBSLEP, WMCA and
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DfT the projects are fully funded. Should any funding gap arise this will have to be the subject of agreement between TfWM and Birmingham City Council as to how it is handled at the appropriate time. Outputs and Outcomes 19. The following outputs and outcomes are expected to be delivered as part of the project:
Output Description Output Quantity Delivered by Enhanced Public Realm 19,700sqm April 2022 Completion of Multi-Modal Public Transport Interchange 1 BEE project Enhanced Pedestrian Routes 1 April 2022 Bus Gate 1 April 2022 Widened Footways Circa. 12,000m April 2022 Outcome Description Beneficiaries Delivered by Catalyst for growth in Birmingham Eastside All April 2023 More attractive environment for pedestrians Pedestrians April 2023 Supporting business (increased footfall) Business owners April 2023 Improved journey times for buses Public transport users April 2023 Improved air quality on Digbeth High Street Pedestrians, residents April 2023 Table 2.0 Project Outputs and Outcomes
Conclusions 20. In summary the Digbeth Public Realm Phase One project aims to be a catalyst for investment and further development in Digbeth and to facilitate this, the project will deliver the following impacts on completion: . Significant public realm improvements by rationalising and re-designing carriageway space with enhanced integration of the Metro tramway into public realm; . Creating an individual identity that supports and protects the current creative arts and heritage as well as future regeneration proposals; . Reducing car dominance, to create an integrated, efficient and reliable sustainable transport corridor; and . Recognising the role of Digbeth High Street as a place to work, live and visit as well as a link, allowing access to those road users who need it. 21. However, it must also be noted that the scope includes the realignment of the tram works which facilitates the public realm improvements. Subsequently, 25% of the total tram works cost has been attributed to the Digbeth High Street Public realm project as Digbeth High Street represent 25% of the total route of the wider MMA metro extension (City centre to Digbeth). 22. Also, whilst the project currently demonstrates a BCR of 3.66 over 60 years and 2.14 over the 30 year consideration period, both represent high value for money in terms of the benefits for the project. 23. The project aims to be delivered prior to the Commonwealth Games and will be fully completed by September 2024 following handover of all five sections of the BEE project.
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Appendices (Available on Request) A Full Business Case, December 2019 B Independent Technical Evaluation, 22 February 2021
Prepared by: Christian Cadwallader, Consultant Programme Manager Reviewed by: Kerry Billington, Consultant Programme Manager
Contact: [email protected], Date prepared: 22 February 2021 Decision
The GBSLEP PDB has reviewed the investment report for the Digbeth Public Realm Phase One FBC and decided to:
Decision Comment/action Approve Approve with conditions Not Approve
Date:
Signed:
Print Name:
Investment Report PDB – DPRP1 (FBC) Page 46 of 83 Item 10b
GREATER BIRMINGHAM & SOLIHULL LEP REPORT FOR PROGRAMME DELIVERY BOARD
03 MARCH 2021 FULL BUSINESS CASE AND INVESTMENT REPORT HOMETEL MURDOCH AND PITMAN
Recommendation
The GBSLEP Programme Delivery Board is requested to:
1. Approve the Full Business Case and note the capital investment request of £1,700,000 (one million and seven hundred thousand pounds) capital funding from GBSLEP to MP Devco Limited for the delivery of the Hometel M&P project. This is in accordance with the GBSLEP Assurance Framework following the submission of a Full Business Case (FBC) and the Independent Technical Evaluation (ITE) received 22 February 2021.
2. Note that the GBSLEP does not have sufficient headroom in the Local Growth Fund to approve the requested £1,700,000 capital investment at this time and the project will remain on the GBSLEP Programme Pipeline. This request for funding will be considered along with other funding requests that the GBSLEP may have at that time once details of future funding are known. The prioritisation of such requests will be dependant on the provisions attached to any available funding and in accordance with the GBSLEP Assurance Framework.
3. Note that if GBSLEP grant funding is available in the future to support this scheme, that any grant would be subject to clawback conditions such that the grant is repayable if the return on the development in future years is greater than is currently forecast in the development appraisal submitted as part of the FBC.
Background 4. MP Devco is seeking £1.7m grant investment towards the £28.2m Hometel M&P project, which involves the refurbishment of a Grade II* listed building and adjoining new build into a 181-bed aparthotel in Birmingham City Centre.
5. An Expression of Interest for the project was submitted to GBSLEP in August 2020 and was assessed as ‘B’ Strong Strategic Fit.
6. A draft Full Business Case (FBC) was submitted on 31 October 2020 as part of the programme pipeline under consideration for the Local Growth Fund (Department for Transport returned funding). A final FBC was submitted in November 2020 and an Independent Technical Evaluation (ITE) was carried out with further information requested to address risk which has been raised. These were addressed by the Applicant and a final ITE was completed on 22 February 2021. The ITE raised no red and six amber rated risks. A number of recommendations for further information to be requested has been made which will be followed up with the applicant.
7. The Benefit Cost Ratio (BCR) for the preferred option is estimated to be 1.7 on the total scheme costs which represents medium value for money
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Case for Change
8. MP Devco is a partnership developer (Regal Properties Group Ltd (through its parent vehicle Pinnacle), CZCW Ltd (a sister company to C Zero Developments Ltd) and Trigram Properties Ltd) who following participation in a comprehensive and open tendering exercise managed by Birmingham City Council (BCC) is acquiring the long leasehold interest in the site (subject to planning) from BCC. The project aims to save one of Birmingham City’s finest remaining Victorian buildings for a viable and sustainable future as an aparthotel. It includes extensive new build (153 rooms within a new eight storey building) with a refurbished Grade II* listed building providing an additional 28 rooms.
9. The building is located in Corporation Street, within the Ladywood Ward, which is a regeneration location for a number of investment priorities and adjacent to the GBSLEP Enterprise Zone. The aparthotel will provide much needed quality hotel accommodation on Birmingham City Centre and is close to Metro, national and regional railway stations and a number of bus routes. The project’s location is well placed to serve the new HS2 Curzon Street Station and will link with new retail initiatives leading to the terminal, including the consented new mixed-use development on the Martineau Galleries site.
10. Access to the site is restricted and the property adjoins law courts so noise will need to be restricted too. BCC’s Planning Department had determined that residential usage within the building was not appropriate and that alternative commercial uses would be supported. The City Council retains the freehold of properties it disposes of from its portfolio, with the head lease hold interest only being sold. A vacant possession strategy is in operation with the majority of this implemented.
11. The proposed development intends to commission its new facility by October 2022 to capture the anticipated economic growth from the legacy of the Commonwealth Games and the anticipated activity and visitors preceding the HS2 phase commissioning in 2020. HS2 will transform the City attracting business visits from London and the Southeast and this project will
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contribute to the lack of high-quality hotel accommodation in the City Centre to serve business visitors.
12. The West Midlands Growth Company’s (WMGC) West Midlands Regional Tourism Strategy 2019 – 2029 refers to a 5* hotel to enhance the business and international offer in particular, but WMG recognise that there can be a conflict there in attracting corporate business where staff may not be permitted to stay in 5* hotels, and consequently the proposed hometel project contributes to the upper end of the city’s quality accommodation needs.
13. The West Midlands Growth Company (‘WMG’) Regional Tourism strategy has two high level goals - to increase the number of staying visitors and to encourage greater core markets: China, Germany, India and the USA. Furthermore, cross-cutting themes expressed in the Local Industrial Strategy recognise tourism as a fast-growing sector - connected to other regional strengths such as innovation, creative industries and events. A young and diverse population will help change outdated perceptions of a region, grow the tourism industry, and help improve productivity, skills and the creative application of digital technologies. The strategy also focusses on ‘Support and leverage for Major Events such as 2022 Commonwealth Games.
14. WMGC’s September 2020 Regional hotel market monitor reports that as ‘Visitor numbers have been growing steadily in recent years, from 122.4 million in 2016 to 133.9 million in 2019, ….coupled with strong growth in the number of overnight visitors to the region, …the region’s serviced accommodation bed-stock has been growing steadily over the past three years, demonstrating the confidence that investors hold in the region’s visitor economy’. The developer has selected a hotel operator who is keen to have the aparthotel commissioned and opened to take advantage of the anticipated occupier demand.
15. The development partners have come together to deliver this much needed high-quality hotel accommodation, and all have track records in delivering high quality innovative development in and around the West Midlands particularly in Birmingham. Although the integration of a new building and a Grade II* building is a complex, property development to create a viable and sustainable asset is in itself straightforward as all the pre-development work has effectively been completed at the developer partnership’s own risk and what remains is the physical construction works to deliver the Hometel facility.
16. The impact of Covid-19 has changed market perceptions and the gap funding is needed to address the financial viability gap and permit the equity and debt components of the rest of the funding to progress. Without the grant, the viability of the scheme is below a level considered to be acceptable to an investor.
17. The options to proceed without this £1.7m public sector intervention have been explored as follows:
a. Do minimum – develop rear new build omitting refurbishment of listed building;
b. Full development – develop full 181 bed aparthotel scheme; and
c. Delayed development – deliver project development by eighteen months.
18. The preferred option – full development for operation by the end of October 2022 – demonstrated the highest BCR. Delaying the project start would not be expected to achieve better viability and would inevitably lose the selected hotel operator. A loan would also not improve viability.
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19.
20. The project aligns with the strategic aims of GSBLEP objectives as it will attract private sector investment; enable more inclusive growth that delivers benefits more widely and reduce unemployment in parts of Birmingham and North Solihull with high rates; and it will harness the transformational opportunity presented by HS2 and the 2022 Commonwealth Games.
21. The proposed redevelopment supports Birmingham City Council’s (adopted) Development Plan and the non-statutory Big City Plan (‘the Council’s 20-year City Centre Masterplan; its vision to encourage and support Birmingham's continuing transformation into a world class city’) and the section on City Core notes ‘Much of the north-east area of the City Core is dominated by some fine historic buildings forming a hub of legal activity around the Victoria Law Courts (Corporation Street) and the Children’s Hospital complex (Corporation Street and Steelhouse Lane’) with the reported ‘Vision for our City Core is to strengthen its role as a 24 hour city’ It reports ‘The overall vision for the City Core is to strengthen its role as a 24 hour city - a thriving shopping, leisure, and business destination which supports the civic and cultural role of Birmingham within a high quality, distinctive and vibrant environment. Expanding the City Core into the surrounding quarters will provide long-term strength and stability for the city centre’. Furthermore, it proposes, that ‘Corporation Street will be re-discovered as the grand street created by the Victorians. It forms the second of the Core’s primary walking routes between New Street Station and Aston University. Within the retail core, buses will be removed to transform the pedestrian and shopping environment allowing introduction of the metro extension. Beyond Old Square, towards Lancaster Circus, the streetscape will be improved to make the most of the area’s historic buildings including the Law Courts and the landmark Methodist Central Hall’...which are both in the part of Corporation Street that is close to this project.
Independent Technical Review 22. The review of the five parts of the FBC is summarised below with any key information gaps and issues to be addressed:
• The Strategic Case provides an argument for the scheme based on the potential to refurbish a largely vacant Grade II* listed building and develop an aparthotel providing visitor accommodation in Birmingham City Centre. The development is aiming to capitalise on the legacy of the Commonwealth Games and opportunities presented by the arrival of HS2. The scheme would also help to create jobs in both the construction and operational stages. A number of interdependencies of the scheme relate to GBSLEP funding being secured and should be confirmed prior to funds being released.
• The Economic Case provides details of the long list of options that were considered and further detail of the short-listed options that have been considered. The preferred option is the ‘do maximum’ option comprises the development of the 181-bed hotel and refurbishment of the Grade II* listed building. The benefits are quantified in terms of additional employment, additional visitor spend and business rates revenues with additionality assumptions applied in line with guidance. Optimism Bias of 7.5% is included within the analysis. The scheme BCR amounts to approximately 1.7 on the total scheme cost which represents medium value for money. The BCR when only GBSLEP investment is considered rises to 26.9.
• The Financial Case outlines the sources of funding for the scheme. GBSLEP grant funding requested accounts for around 6% of the overall project cost. Private sector
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investment of £26.5 million has only been agreed provisionally at this stage, and confirmation is contingent upon securing the investment from GBSLEP in order to make the scheme viable for the private sector. The extant contract for site acquisition has extended its longstop date to July 2021. The Applicant confirmed responsibility for cost overruns and a Quantified Risk Assessment (QRA) has been provided as part of the clarification process. State Aid exemptions have been reviewed but no independent legal advice has been obtained.
• The Commercial Case outlines the procurement strategy for the scheme. Emmaus as project manager is overseeing the procurement of contractors. Preferred contractors have been confirmed for Stage 1 (Claritas Group) and Stage 2 (GTH Construction). Contractor appointments is contingent upon confirmation of availability of GBSLEP grant funding which will enable the scheme to progress.
• The Management Case has provided detail of the project delivery programme and key milestones. Risks associated with the delivery programme have been included in the risk register including details of risk owners. The Applicant has confirmed that the construction programme has no fixed dependencies and a 3-6 months programme delay would not fundamentally impact on key issues (i.e. lease completion, external funding). The applicant has provided case studies of similar projects that have been delivered successfully. Planning consent has not yet been secured although evidence has been provided that Birmingham City Council is supportive of the scheme. Applicant has confirmed that planning and other dependencies will be resolved once GBSLEP funds are agreed in principle and the scheme becomes viable. Evidence of consents and dependencies being met should be provided prior to release of funds.
23. It is understood that the majority of the issues raised in the ITE could be resolved if GBSLEP grant funding is available. This would allow the applicant to kick-start the project including finalisation of planning, confirmation of private funding and commencement of contractor appointment and lease agreements. The Applicant has helped to resolve other outstanding issues. The scheme overall represents medium value for money on the total project cost. Therefore, based on the findings above, it is recommended that if GBSLEP funding is available release of funds should be conditional upon the following:
• Planning approval should be confirmed prior to any GBSLEP monies being released and the applicant should confirm the impact on construction start date once planning is granted;
• The applicant should confirm all dependencies (including private funding, vacation strategy, contractor appointment and lease agreements) have been met prior to funding being released;
• Applicant to provide evidence that the private sector investment of £26.5m has been secured. Provide supporting letter as evidence if only agreed in principle; and
• Evidence of independent State Aid advice should be provided prior to funds being released.
State Aid 24. Devco have indicated in the FBC which was submitted before the BREXIT, that GBER regional Aid exemption is relied on which allows public sector grant funding up to 30% of project costs
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for small enterprises in Assisted Areas. Independent state aid would need to be provided as part of any release of grant funding.
Outputs and Outcomes 25. The projected outputs and outcomes as detailed in the FBC are included in Table 1 below. The delivery date of these will be very much dependent on securing GBSLEP funding and when the project can start and will likely change from those submitted in the FBC which had assumed a start of the project in January 2021 and completion of the main contract in August 2022 with the aparthotel operational by the end of October 2022.
Proposed Outputs Number Output Description Quantity Delivery date
1. New/Refurbished Commercial 8,088 31 August 2022 Floorspace (sqm) (5,522 New build) (2,566 Refurbished) (Gross Internal Area) 2. New Hotel Rooms 181 31 August 2022 3. New/Safeguarded jobs (net 62 31 January 2023 FTE) 4. Private Sector Leverage £26.5m 31 August 2022 (Direct) Proposed Outcomes Number Outcome Description Quantity Delivery date
1. Repurposing of Grade II* listed 1 31 August 2022 building 2. Construction jobs (FTE 100 31 August 2022 Indirect) 3. New entrant construction jobs 27 31 August 2022 FTE Indirect) 4. Additional indirect and induced £26.7m 31 August 2032 financial impact (over 10-year Hometel operation Table 1.0 Hometel M&P Proposed Outputs and Outcomes
Funding Profile
2019/20 2020/21 2021/22 2022/23 Total £’000 £’000 £’000 £’000 £’000 Capital (GBSLEP) 0 1,700 0 0 1,700 Capital (Private Sector) 200 2,280 11,510 12,520 26,510
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Total 200 3,980 11,510 12,520 28,210 26. The funding profile as detailed in the FBC is included in Table 1 below. The profile of this will be very much dependent on securing GBSLEP funding and when the project can start and will likely change from those submitted in the FBC which had assumed a start of the project in January 2021 and completion of the main contract in August 2022 with the aparthotel operational by the end of October 2022. Table 2 Hometel M&P Proposed Funding Profile
27. The funding is mainly from the private sector £26.5m with a £1.7m LEP grant fund request. The external funding arrangements have been agreed provisionally to provide the £26.5m investment and are contingent upon the grant being agreed.
Project Risks 28. Devco is seeking to address a need to provide more high-quality hotel space by refurbishing a Grade II* listed building and adjoining new build within Birmingham City Centre. In relation to the continuing impacts of the Covid19 pandemic and the potential decrease or delay to demand for a return to City Centres, there is a risk that the aparthotel will not achieve full occupancy. The key financial risks is identified as the availability of grant funding. There is also a financial risk of increased costs due to delays and design changes, however cost overruns will be borne by the Applicant. There is also the risk of not getting planning consent, however discussions have taken place with BCC as the Planning Authority who have indicated that they are supportive of the proposed development. An overall risk register has been provided and will be reviewed and updated.
Conclusions 29. The Hometel M&P scheme involves the refurbishment of a Grade II* listed building and adjoining new build into a 181-bed aparthotel in Birmingham City Centre. In the absence of public sector funding, the development will not be able to bridge the viability gap and proceed with the proposed aparthotel. The project will provide much needed quality hotel accommodation on Birmingham City Centre and is close to Metro, national and regional railway stations and a number of bus routes. The project’s location is well placed to serve the new HS2 Curzon Street Station and will link with new retail initiatives leading to the terminal, including the consented new mixed-use development on the Martineau Galleries site.
30. The Full Business Case demonstrates a strong strategic rationale for supporting the project and offers medium value for money with a Benefit Cost Ratio (BCR) estimated at 1.7. The scheme could progress if GBSLEP funding support was available.
Appendices (Available on Request)
A Full Business Case and Independent Technical Evaluation (available on request)
Prepared by: Kerry Billington, Interim Programme Consultant
Reviewed by: Christian Cadwallader, Interim Programme Consultant
Contact: Kerry [email protected]
Date prepared: 22 February 2021
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Decision
PDB has reviewed the investment report for the Hometel Murdoch & Pitman project and decided to:
Decision Comment/action Approve Approve with conditions Not Approve
Date: 03 March 2021
Signed:
Print Name:
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Project Exception Report
Project Name: Birmingham Smithfield Project Sponsor: BCC (Ian Macleod) Project Manager: Ashley Innis LEP Approved Date (actual/forecast) Project Start On Site Report Completed by Report Date th Date: TBC (Sponsor/PM) BCC (Vinny Naga) 18 February 2021 Background Birmingham Smithfield will create an exciting new destination at the heart of the city centre. It will radically transform the city’s visitor economy creating a major cultural and leisure destination with a dynamic mix of uses that will include vibrant markets and leisure and cultural facilities, a major public square, and an exemplar residential neighbourhood. In October 2015 the Enterprise Zone (EZ) Executive Board approved funding of £300,000 to support and inform the work of the Masterplan.
To support Birmingham Smithfield’s delivery, in September 2016 BCC formally approved a masterplan setting out the vision and big moves for the site. With the approved Masterplan in place, attention turned to securing a delivery partner to deliver the masterplan. A Delivery Advisor was appointed to support this process. The Delivery Advisor is funded from the Enterprise Zone (EZ) programme as part of the Birmingham Smithfield Development Project, which was approved by the EZ Executive Board on 2 November 2016. This was approved for £939,889.
The associated payment schedule was based on the following phases, including entering into a Joint Venture Agreement with the development partner, developing a hybrid planning application, submitting an Outline Business Case and a Full Business Case and commencing works on site:
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In November 2016 BCC approved £939,889 to FBC stage. The additional £300,000, approved in October 2015, covered the sum of £145,212 which had already been defrayed by 31 March 2017. However, as the Masterplan work progressed it became clear that some of this work would be better delivered with more relevant outcomes at a later date by the delivery advisor. The EZ Executive Board approved in June 2017 that the technical studies budget would form part of the Birmingham Smithfield Development Project. Following this decision, the total remaining budget was £1,094,677 (£939,889 plus £300,000 minus £145,212).
The Reason for the Change Request
Extended Programme Development
The original application for development funding assumed that the procurement of the Delivery Partner and the Joint Venture Agreement (JVA) by BCC would be signed in February 2018. It was also expected that the Outline Business Case (OBC) (2018) and Full Business Case (FBC) would be submitted and approved in 2019. Following the procurement process, identification and announcement of a preferred partner, a number of factors have delayed the formal appointment which was anticipated to follow approval of the OBC. The project is a 15-year, five phase major transformation programme across a large area of the City, pulling in £1.8bn of private investment, the largest total programme on the EZ Investment Plan.
The primary reason for the change is due to an under-estimation of the time, resources and work required to bring such a large and complex scheme to satisfactory OBC and FBC completion. The level of planning and programme detail required for a Treasury Green Book compliant OBC following the appraisal of the council’s first submission could not be put in place without material risk falling on the private partner, recognised by PDB and the LEP introducing the SBC into the approval process. Further adding to the time increase has been the award of host city status for the Commonwealth Games in 2022 to Birmingham and the request to use and showcase the Smithfield Site as a temporary use venue during the Commonwealth Games 2022. As a consequence of these factors, the on-going contract negotiations with the Delivery Partner, resource constraints and detailed programme information required for the production of a compliant OBC has materially impacted on the development timeline
In hindsight the initial request for funding should have focused on the engrossment of a JVA with the Delivery Partner. It would then have been appropriate to request additional funding for the development of the OBC and phased FBC development to be released once the JVA had been engrossed. The funding request would have, in total, exceeded the £939,889 initial request.
Issues with submitting the OBC included:
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• The change from the agreed format/content of the OBC notified to the project team too late to be incorporated in the December 2019 submission. This meant that at the time of submission, the project team (BCC, Lendlease and Amion) carried out additional works to amend the format; • Delays in receiving the S123 sign off from engaged third party support which resulted in additional meetings/time; • Once submitted, the OBC did not contain all the information required to achieve a Treasury compliant Green Book Business Case. This included elements such as consideration over the amount of the transport programme spend leading to unforeseen additional work and consideration of whether there would be a WebTag requirement which was identified by GBSLEP’s independent consultant; and • There were further delays whilst negotiations on the content of an OBC for a 15-year programme took place. This included elements such as materially expensive planning permissions and details on future lines of expenditure being in place and provided by the delivery partner at their risk.
In addition to the above, the impacts of COVID-19 have prolonged the contract negotiations and OBC works over the last 10 months. Both BCC and Lendlease have now received approvals to enter into a Joint Venture Agreement with the engrossment to take place on the early March 2021. This is three years later than the ambitious programme approved in the initial funding approval by GBSLEP.
Change in delivery timescales
The original approved funding was based on entering a JVA and submitting an OBC and FBC. Whilst BCC submitted an OBC to GBSLEP it did not satisfy the requirements for a number of reasons (some outlined above) but also due to not having entered into a JV Agreement and therefore lacking the full detail that would have been available from the hybrid planning application. As a resolution to moving the project forward, GBSLEP agreed for BCC to submit a Strategic Outline case (SOC) for the overall programme, a stage gate which has been approved by the LEP Board and adopted as a change to the LEP framework for similar size schemes in the future. This has allowed for BCC and the project team to re-baseline the programme to OBC and FBC on the basis of signing a JVA in Feb 2021. Therefore, the OBC is now programmed to be submitted for approval in Q4 2021/22 following the development of a hybrid planning application; the FBC for Phase 1 is schedule for 2023 following further design development.
Additional funding request
Due to the delay in the programme as submitted as part of the original funding request, the costs incurred have exceeded the original budget. However, in hindsight the original request for funding of £939k would not have been sufficient to cover the works required to enter into a JVA on such a large scheme, and the work required to subsequently deliver an Outline and Full Business Case.
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As detailed above, the total original approved budget is £1,239,889 which was allocated to FBC stage. However, due to the re-baselining the programme, costs incurred to date and forecast to JVA amount to £2,545,684, of which BCC have match funded £330,000. Therefore this report requests an additional £975,796 (£2,545,684 less £330,000 less £1,239,889) to fund works carried out to date and to enter into the JVA in March 2021.
The costs incurred fall into three categories:
a) £215k for Delivery Adviser; b) £423k for Legal Adviser; and c) £310k BCC Project Management and associated costs
Additional Development Funding (JVA to OBC)
The additional funding of £976k highlighted in this change request covers works required up to engrossment of JVA and will form part of the £4.0m development costs highlighted as part of the SOC. The £4.0m included in the financial model, incorporates costs required to complete and submit a full programme OBC and subsequent phase FBC’s. It is to be noted, that work previously carried out in developing the OBC and the discussions held with GBSLEP and its consultants will not be wasted, and this work will be utilised going forward. Likewise, for the extensive legal work carried out to date, and as such the request for funding included in the SOC has not increased from £4.0m.
Detailed costs/resources required to progress the project from OBC to the phased FBC’s will be included in the OBC due to be submitted in Q4 2021/22.
Funding Agreement/SLA Sept 20 (all Current Forecast March 2021 – Variance + / - Project End Date deliverables) Project End Date for JVA only (months) 18 Months Reason for time variance The original project end timescales were based on signing a JVA, submitting an OBC and FBC for approval and for the first year of six months of monitoring the project. However, due to the delays in signing the JVA, introduction of the CWG2022, issues with the information included in the original OBC submission and COVID-19, the JVA will not be ready for engrossment until w/c 1st March 2021 and OBC will not be submitted for approval until Q4 2021/22 once work has been carried out on the hybrid planning application. The Phase One FBC is planned to be submitted in 2023. Funding Agreement/SLA Current Forecast Variance + / - Forecast Total Project Cost £1,239,889 Total Project Spend £2,215,684 (£975,796) Funding Agreement/SLA £1,239,889 Current Forecast £2,215,684 Variance + / - (£975,796)
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Total EZ Allocation Total EZ funding Required/Allocated Reason for required/allocated Additional time and resources required to complete the procurement and signing of contract due to issues raised EZ variance with the first OBC submission, lack of available hybrid planning application, Delivery Partner negotiations and COVID-19. Funding Agreement/SLA Actual EZ funding claimed to Variance + / -
Forecast EZ Claims to date £1,184,694 date £1,060,287 £124,407 Additional time and resources required to complete the procurement and signing of contracts due issues raised Reason for claim variance with the first OBC submission, lack of available hybrid planning application, Delivery Partner negotiations and COVID-19. EZ Quarterly Claims/ Forecast £’000s 2015/16 Q1 Q2 Q3 Q4 Total SLA/Funding agreement profile 0 0 0 0 £0 Current Profile 0 0 0 72.0 £72.0 2016/17 Q1 Q2 Q3 Q4 Total SLA/Funding agreement profile 0 0 0 0 £200.3 Current Profile 73.2 0 0 36.6 £109.8 2017/2018 Q1 Q2 Q3 Q4 Total SLA/Funding agreement profile 0 0 0 0 £388.6 Current Profile 0 0 0 724.4 £724.4 2018/2019 Q1 Q2 Q3 Q4 Total SLA/Funding agreement profile 0 0 0 £ £308.8 Current Profile 52.0 5.5 71.8 24.7 £154.1 2019/2020 Q1 Q2 Q3 Q4 Total SLA/Funding agreement profile 0 0 0 0 £30.5 Current Profile 59.8 81.5 201.0 76.5 £418.9 2020/2021 Q1 Q2 Q3 Q4 Total SLA/Funding agreement profile 0 0 0 0 £11.7 Current Profile 54.5 175.9 210.9 295.2 £736.5
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Key Risks and Issues (showstoppers) Planned mitigation / contingency Key risks are now associated with the The following have mitigated the risks: development of the hybrid planning • Strong relationship between BCC and Lendlease means issues in relation to signing the JVA application and the OBC. Any significant are being actively discussed and managed. delay to engrossing documents will have an • Governance relating to hybrid planning application and OBC is being discussed and finalised impact on the OBC submission date. as part of the JVA to allow a strong robust process post JVA to mitigate risks of non/late delivery
Critical milestones completed this quarter The project has already achieved a number of milestones: The following actions will be carried out: • Strategic Outline Business Case submitted and approved by GBSLEP and • BCC has committed to continue engaging with three amber rated actions remain outstanding; GBSLEP to address the remaining three amber rated • BCC Cabinet approved the delegated authority to sign JVA; actions and will start to work on clearing any OBC • Roadmap to OBC and FBC has been developed and shared with GBSLEP; amber items based on previous OBC assessment • Heads of Terms agreed with the CWG2022 Organising Committee; and • BCC has committed to carrying out early enabling works in 2021 ahead of the CWG2022 to minimise the impact on the overall Smithfield programme.
Critical milestones DUE but NOT completed this quarter/year Reason Engrossment of Joint Venture Agreement Delays as explained above Critical milestones to still be completed Date for completion Engrossment of Joint Venture Agreement 19th February 2021 Forecast Outputs (inc date(s), as per SLA/Funding Agreement) Forecast variance to outputs Engrossment of Joint Venture Agreement No variance on outputs
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Decision required Reason for variance Agreement to fund additional development As per change request. funding of £975,976 and approve the delay in achieving the outputs. Supporting information
NA
GBSLEP use only LEP Project Christian Cadwallader Project Support: NA Report Received Date 18 February 2021 Champion: Programme Team Review
Birmingham Smithfield is a large and complex project which has required significant development and resources to progress to the point of procuring and signing a legal agreement with a delivery partner. This change request highlights that this was primarily due to an under- estimation of the resources required to progress to both the legal agreement and approval of an outline businesses case and full business case. This has been further diluted by the extended procurement programme and frustrations in developing a Treasury compliant Green Book outline business case. Whilst there are additional reasons highlighted in this change request, these are minor when compared to the above.
To support the progression of the procurement of the delivery partner, GBSLEP has reviewed and amended the Assurance Framework to accommodate an additional stage in the business case process (Strategic Outline Case), which has also been submitted and approved. In addition, BCC and GBSLEP have introduced additional project monitoring/management which is now being presented to Programme Delivery Board and Board on a regular basis through both regular updates and milestone/roadmap reporting.
The next stage of the project, once the Joint Venture Agreement is signed, is to progress with both a hybrid planning application and outline business case; this will require additional development funding beyond that identified in this change request. It is recommended that BCC consider submitting an additional change request which determines these costs within 6-8 weeks for the Programme Delivery Board meeting.
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Progressing to a position where Programme Delivery Board may consider any requests for funding in advance will reduce the project risk and help introduce additional certainty into the project financial programme.
It should be noted that the Strategic Outline Business Case identified potentially £4.0m of development costs, in addition to the previously approved funding to support the initial procurement of a delivery partner. It is proposed that the additional funding request for £975,976 and any additional funding for development to outline business case and full business case is allocated from this identified funding allocation. However, this may need to be reviewed in the future and will be subject to the availability of funding in the EZ financial model and the approval of Programme Delivery Board and GBSLEP Board.
It is therefore recommended that Programme Delivery Board approve the additional funding and request that an additional change request is submitted to GBSLEP for consideration to support the project to Outline Business Case submission and approval.
PDB Decision Date
Project Risk RAG RAG Status key: Risk type RAG Green On target to hit original forecast (including within agreed tolerance) Time Current - No longer on target to meet original forecast & minor impact on the overall project Benefits Amber Future – At risk of missing original forecast & minor impact on the overall project Cost Current - No longer on target to meet original forecast & significant impact on the overall project Red Future – At risk of missing original forecast & significant impact on the overall project
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Greater Birmingham & Solihull LEP Project Change Request – Growing Places Fund Project Name The Grand Hotel, Birmingham
Organisation Grand Principal Birmingham Limited
Date of Request 5 February 2021
Project Manager Andy Green, Finance Birmingham Project SRO Tony Troy, Grand Principal Birmingham Ltd
Project Manager [email protected] Project SRO [email protected] contact details contact details
Project Manager Project SRO signature signature
Section 1: Project Progress to date Please include a brief outline of project progress to date. (E.g. milestones achieved expenditure to date and challenges faced.)
Growing Places Fund (GPF) grant of £3.0m repayable grant and £2,0m non-repayable grant was approved in April 2015 to support the refurbishment of the Grade 2 Listed Grand Hotel at No.1 Church Street in Birmingham City Centre. Birmingham City Council has also approved £1.0m grant support to this project.
The first instalment of £1.0m (non-repayable grant) was made in March 2017.
A change request was approved by PDB in August 2020 to agree an extension in the timescales for completion of the Grand Hotel to November 2020 with a backstop date of 31 March 2021 for the grant timescales and outputs to be achieved. A Deed of Variation was completed to effect the approved change request.
A further grant instalment of £2.5m (repayable grant) was made in December 2020.
The works to the hotel reached practical completion on 21 October 2020, after delays because of the restrictions to working and social distancing and the continuing lockdowns imposed because of the impact of covid-19.
Please see Appendix A for photographs showing the works to the Grand Hotel.
Progress to date is as follows:
• Following formal completion of the hotel is fully functional, all areas decorated and furnished; • All structural works completed, infrastructure completed and tested, supply contracts in place and operating; • All 185 guestrooms fully operational; • Equipment for the various departments e.g., kitchen, bar, restaurant and M&E onsite and in place; and • Initial four day “Family & Friends” trial run period interrupted due to government restriction announcement beginning of November. Ideally to take place prior to opening.
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The Grand Hotel is ready to open, however with the Government restrictions on the hospitality sector still in place Principals have, through no fault of their own, have unfortunately been prevented from opening the Hotel for business.
Staff have been recruited to the hotel in key positions, marketing has taken place to promote the Hotel’s opening with a pre-launch event planned for December, which had to be cancelled. Without a firm date for opening for business, it is not feasible to recruit all the required staff to ensure the smooth operation of the Hotel or plan the full marketing and launch campaign.
However, Grand Principal Birmingham Ltd (GPB) has confirmed that they will be ready to achieve a non- commercial opening date within two weeks from a date announced by Government that the hospitality sector, including Hotels, can operate again. A non-commercial opening will allow the Hotel to test out the operations, facilities and enable the staff to get up to speed in to ensure that the Hotel is up and running with a full date for commercial business as soon after that as is practical. GPB has provided the high-level plan to demonstrate that opening can and will be achieved subject to the lifting of Government restrictions. This is included in Appendix B.
The remaining grant of £1.5m (£1.0m non-repayable and £0.5m repayable) was forecast to be paid between December 2020 and 31 March 2021. The Deed of Variation stipulated that GPSLEP would pay the final £1.5m grant subject to:
(a) Receipt of a satisfactory qualifying expenditure certificate evidencing £45 million of qualifying expenditure by the Applicant on the project construction costs for the Hotel (received by GBSLEP); (b) The Applicant not being in breach of the terms of the Grant Agreements (as varied); and (c) A further visit of the site by the Council and its representatives including Finance Birmingham and GBSLEP to ensure that all the provision of the Grant Agreements (as varied) have been complied with in all material respects (including, but not limited to, verifying that the Hotel Opening Date and the Milestones have been achieved) and there are no outstanding breaches and/or any breaches have rectified to the Council’s satisfaction. A new clause was also put into the agreement such that ‘the Applicant shall use its reasonable endeavours to procure that the Hotel achieves: (a) A non-commercial opening by 30 November 2020; and (b) The Hotel Opening Date by 31 January 2021, or as soon as reasonably practicable thereafter being any event no later than 31 March 2021.’
Following the announcement on the 22 February and the roadmap to lifting lockdown restrictions, (data permitting) the Hotel could be ready to have a non-commercial launch within two weeks of the target date for Hotel openings in the UK of 17 May 2021, with a full opening for business in June 2021.
Section 2: Change requested Type of change requested Check each that apply
Project Scope Project outputs/outcomes Project finances
Programme/Timescales Other
Description of A request for an extension to the timescales to deliver a number of the outputs from 31 change March 2021 to 31 March 2022 has been made. As the Applicant has complied with all but the condition to open the Hotel by the Target Dates of non-commercial opening by 30 November 2020 and Hotel Opening by 31 January 2021 with a no later date that 31 March 2021, a request to draw down the remaining funding from both GBSLEP and BCC has been requested by 31 March 2021. This is to be agreed on the condition that the Hotel will be open within two weeks of the Government
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date for the restrictions to be lifted to allow the Hotel to open – currently suggested as 17 May 2021 (subject to data).
Reason for change The Hotel works reached practical completion in October 2020 but with the continuing request current Government restrictions in place the Applicant, despite best endeavours has not been able to achieve the Hotel opening and operating for business by the Targets date and will not be able to by the long stop date of 31 March 2021.
As the Applicant has complied with all the other conditions with the exception of achieving the Hotel opening by the Target Dates of non-commercial opening by 30 November 2020 and Hotel Opening by 31 January 2021 with a no later date that 31 March 2021, a request has been made to extend the date of Hotel opening.
The Grand has been funded to date through group cash flow without any third party bank debt and the delay to the Hotel Opening has further impacted cashflow. Therefore, a drawdown of the remaining grant has been made which would be beneficial in terms of current cashflow to them and would also aid preparations to open as soon as Government restrictions allow.
Following the announcement on the 22 February 2021 and the roadmap to lifting lockdown restrictions, (date permitting) the Hotel could be ready to have a non-commercial launch within two weeks of the target date for Hotel openings in the UK of 17 May 2021, with a full opening for business in June 2021. Alternative options considered: with N/A – the Hotel has reached practical completion and is ready to open for business reasons why the recommended option is the most appropriate.
Detail of There is no stakeholder consultation required regarding this change request. stakeholder The GBSLEP Communications Team are in contact with the Grand Hotel with regards to consultation GBSLEP involvement in communications around the Hotel launch and opening. regarding change request
Section 3: Impact of recommended change A change to the timing of achievement of output No 3 and 4 from 31 March 2021 to 31 March 2022 is proposed, as follows: Please provide a description of the No Output Quantity By REVISED impact of the When DATE recommended 1 Secure a major up-market international 1 31 March Achieved change including: hotel brand not currently represented in 2021 Project cost, the City open for business on the Site Timescales, Resourcing, 2 Remove a grade II listed building from 1 31 March Achieved Benefits, Quality, the ‘At risk register’ 2021 Scope 3 Generate at least £400,000 per annum £400,000pa 31 March 31 March additional business rates1 2021 2022
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4 Create 136 hospitality jobs as a direct 136 31 March 31 March result of opening the Hotel 2021 2022
1 This achievement of this output is dependent on any concession which the Government might give to the payment of business rates in the Hospitality Sector in the coming year.
There is very little revenue impact for the LEP maintaining the payment profile of longstop date of 31 March 2021 as it has been budgeted for within the financial year.
BCC is also proposing to amend the terms of the Council £1.0m grant to reflect a similar position as proposed by this change request.
Steps required to A Deed of Variation will be required to effect the change in outputs dates and payment of deploy change the remaining grant by 31 March 2021.
Is there an impact No, the GBSLEP Comms team will be involved in the planning around the Hotel Opening. on Communication planning?
Section 4: To be completed by GBSLEP Date required for response 3 March 2021
Deed of Variation required? Yes No Recommendation from GBSLEP Approved Rejected Deferred (detail: )
Justification of decision This project has brought about the refurbishment of the Grand Hotel which reached practical completion in October 2020 and the opening of the hotel would have been achieved should Government restrictions not been in place. Best endeavours have been made by the Applicant to demonstrate that the hotel could have opened to trigger the balance of the grant drawdown. Therefore, it is recommended, following a site visit to confirm and evidence being provided in respect of the contract requirement, that the draw-down of the remaining grant of £1.5m is approved. This will be subject to an extended long-stop date, to be agreed, and linked to the Government restrictions being lifted.
The imposed Government restrictions, in response to the impact of Covid-19, has also prevented the achievement of the outputs as defined in Section 3 and therefore it is considered reasonable that the deadline is extended to facilitate the achievement of outputs.
Decision date 3 March 2021
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Does this change impact SEP No objectives?
Does the business case need to be No reviewed and updated, in light of the change?
Signed LEP Programme Manager/ Kerry Billington, Interim Programme Consultant Project Champion
Dated 24 February 2021
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Appendix 1 – Photos of the Hotel refurbishment
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Appendix B – Plan for Opening
Current Staffing Structure • At present the hotel team consist of 48 contracted employees. • All Management and Senior positions have been recruited, fully trained and in place. • Line staff and team positions are recruited to cover the initial planned soft opening of 80 bedrooms and bar service only. Full complement of staff to recruited once hotel fully operational. • Present structure allows to recruit and build a “complete” team for a fully operational hotel once opening date is established. Recruitment requirements Recruitment process will be prioritised by the required skill-set and training required and therefore prioritised as follows: • Kitchen brigade staff/team required to open ISAAC’s restaurant - Operate full shift pattern 7-days - capacity to cater for afternoon tea plus room-service- base crew (2 Senior Chefs) for M&E/Conference catering • Housekeeping recruit additional supervisory and line staff • Restaurant supervisory and line staff for breakfast service - recruitment of lunch and dinner brigade (concept) Key Timings and Rollout for Opening All staff presently on furlough; re-opening requires the following key roles to return in advance of the opening: 2 months out • Executive Chef to finalise culinary offer for the bar. • Finalize menu for the restaurant- Complete menu selection for Rooms Service and Meeting & Events • Train and “cook off” with new brigade. • Start recruitment process for kitchen brigade (at present only 3 staff strong). • HR-Manager to upload and manage recruitment process and applications for kitchen and prepare for on boarding. 6 weeks out: Executive Housekeeper, Asst. Housekeeper and team of 4 • Refresh all previously prepared bedrooms. • Start recruitment of further line staff. Compliance Manager (3days per week) and Training Manager: • Preparation of all refresher and updated safety training documentation for roll-out. • Update risk-assessments and compliance assessments. • Update and installation of COVID-19-Safe processes for roll-out. 4 weeks out: All HOD’s to come back into the business to: • Check departmental stocks and storerooms set-up, distribute operational equipment. • Plan and proceed further team recruitment for full opening stage/capacity. • Place orders for last minor operational material for opening.
Operational status systems, processes, marketing
All business operating systems such as reservations, accounting and internal communication system in place and operating smoothly • Business management systems for Revenue Management, Marketing, Website and online booking portal in place, tested and managed • Ordering and accounting processes in place and tested • Guest rooms collateral & amenities in store and ready for distribution, initial linen for 80 bedrooms in place, base levels of cleaning supplies guest supplies in place • Initial beverage stock for bar operation in cellar – any additional to be ordered • All food stock to be ordered • All initial operational equipment onsite in stock e.g. glassware, crockery etc. • Revenue Management and online distribution channels fully connected, tested and functionally • Website fully “live”; additional visuals ready for upload onto website • PR-activity planning complete ready for launch • Launch photoshoot completed for website enhancement and PR/Marketing launch completed (see below) • Marketing activities all confirmed and ready for roll-out; at this stage changing visuals from “Welcome Back” to • “Spring 2021” for pre-opening activities launch in the next few weeks in industry trade media# • External specialist support contracted under consultancy agreements for Brand and Marketing, PR Company, People & Culture in place.
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Greater Birmingham & Solihull LEP Project Change Request
Project Name The Jewellery Quarter Townscape Heritage Project
Organisation Jewellery Quarter Development Trust
Date of Request 11 February 2021
Project Manager Luke Crane Project SRO
Project Manager [email protected] Project SRO contact contact details details 07557 383183
Project Manager Project SRO signature signature
Section 1: Project Progress to date Please include a brief outline of project progress to date. (E.g. milestones achieved expenditure to date and challenges faced.)
A grant agreement was completed on 12 May 2016 to deliver the Jewellery Quarter Townscape Heritage Project. The project consisted of capital works including building repair and public realm works to the following public throughfares: Vittoria Street, Frederick Street, Regent Street, Regent Place, Legge Lane and parts of Albion Street, Graham Street and Warstone Lane. The public realm works include repair, replacement, and construction of traditional elements of the street scene to help restore vacant and underused listed buildings and historic assets.
The grant period was from 2 January 2016 to 31 December 2018.
The total cost of the project at that time was estimated to be £2,012,500 consisting of £50,000 GBSLEP Growing Places Fund Grant and £1,962,500 match. The LEP funding was to support public realm improvements. The latest programme cost estimate has not changed.
The JQTH scheme was significantly delayed in starting because of time taken by Heritage Lottery Fund (HLF), now known as the National Lottery Heritage Fund (NLHF), and Birmingham City Council to agree to the terms and conditions of the Council’s role as accountable body to the scheme. The JQTH scheme subsequently was granted permission to start by the HLF in December 2018. The delays to the start of the programme did impact on some of the proposed building projects, as some owners had already undertaken the works themselves or had sold their properties. There was initially a slow start to the take up of grants. However, the JQTH is now proving successful and has been extended into a 4-year programme with new schemes approved by NHLF for inclusion in the programme. One building scheme has already completed works and a further two are currently on site with five more grant applications anticipated.
Public realm works approved to date include the reinstatement of a traditional pavement light, which will be undertaken as part of the associated building project works and the repair and refurbishment of the Chamberlain Clock Tower, located on the junction of Frederick Street and Warstone Lane. The Clock Tower is a grade II listed historic asset and crucial element of the street scene. The refurbishment of the Chamberlain Clock is well underway and due to be completed in Spring 2021. Page 75 of 83 Item 11c
Chamberlain Clock pre-works
Chamberlain Clock being removed from site and undergoing the restoration project in the Smith of Derby workshop
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Argent Centre, Frederick Street. Top picture shows Argent Centre pre works. Bottom and right show Argent Centre post works. Works undertaken to the exterior include repairs to stonework and brickwork and the reinstatement of turrets to the corner of Frederick St and Legge Lane. Repairs have led to a significant improvement to the street scene.
GPF funding will be provided for works which will relate to the repair, refurbishment, and reinstatement of the Chamberlain Clock Tower, which is a key element of the JQ’s street scene and gives it its distinct sense of place. Works have already begun on the Clock Tower and it has been removed from site and is currently in the Smith of Derby factory in Derbyshire undergoing restoration. It is anticipated to be returned to site at the end of March 2021. Other public realm work, including the reinstatement of pavement lights along Vittoria Street are anticipated to be undertaken during 2021.
The economic outputs to bring back vacant space into use were agreed to be collected as part of the NLHF funding.
The JQTH project is currently in progress and is delivering on its required outputs. Without the LEP funding, there would be a serious impact on the project budget which would necessitate works being dropped from the schedule and therefore detrimentally impact the project outcomes.
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Section 2: Change Requested & Impact Type of change requested Check each that apply
Project Scope Project outputs/outcomes Project finances
Programme/Timescales Other
Description of The timescales for the project to deliver within have extended beyond the agreed change date of 31 December 2018, resulting in changes to: • Date of delivery of outputs from 31 December 2018 to February 2022 • The projected date of claim changing from January 2016 to March 2021 Reason for change The JQTH scheme was significantly delayed in starting because of time taken by request Heritage Lottery Fund (HLF), now known as the National Lottery Heritage Fund (NLHF), and Birmingham City Council to agree to the terms and conditions of the Council’s role as accountable body to the scheme. The JQTH scheme subsequently was granted permission to start by the HLF in December 2018.
Notification was received in 2017 that the grant funding was still required, however no formal request for the grant period to be extended was made at that time.
Please provide a The impact of the delays in the JQDT programme (as shown below) has led to a description of the change in financial profile and delivery of outputs. impact of the Jewellery Quarter Townscape Heritage Project
2017 2018 2019 2020 2021 2022 recommended Oct- Dec Jan - Mar April - June July - Sept Oct- Dec Jan - Mar April - June July - Sept Oct- Dec Jan - Mar April - June July - Sept Oct- Dec Jan-Mar April - June July - Sept Oct- Dec Jan-Mar PtoS Process Staff Adverts and Appoint's Contracts with BCC Guarantor Body and with 3rd Parties change including: Prepare Guidance Notes, Grantee App'n Form Capital Works Programme Argent Centre, Frederick Street Project cost, 22-24 Vittoria Street 51-53 Vittoria Street 9 Regent Place 62-65 Albion Street Timescales, 23-26 Warstone Lane Public Realm Refurbishment of Chamberlain Clock Resourcing, Reinstatement of pavement lights to Vittoria Street Benefits, Quality, 1) The financial profile has changed from: Scope Funder Funding Amount (2015/16) GBSLEP (GPF) £50,000 HLF £1,827,500 Historic England £10,000 JQDT (JQBID) £100,000 BCC £25,000 £2,012,500
As follows to:
Funder 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 Total £ £ £ £ £ GBSLEP 50,000 50,000 (GPF) HLF 10,764 53,863 113,956 406,573 1,371,598 1,827,500 Historic 10,000 10,000 England JQDT 33,333 33,333 33,333 100,000 BCC 25,000 25,000 TOTAL 108,333 2,012,500
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2) The date of delivery of the output (shown in the Table below) has changed from ‘Between 1st April 2016 and 31 December 2018’ and the method of independent verification has been updated from ‘District Engineer’ to ‘Conservation Officer’ as shown below:
Output Description REVISED Date of Method of Independent Delivery Verification Public realm works February 2022 (JQTH Conservation Officer, within the Named Project Completion Birmingham City Streets in the Project Date) Council; and Area. This will include photographic evidence the repair, replacement, and construction of traditional elements of the street scene to enhance the unique sense of place
The works are subject to statutory consents i.e. listed building consent so BCC Conservation Officer is considered more appropriate for verifying the completion of the outputs.
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Section 3: To be completed by GBSLEP Date required for response 3 March 2021
Deed of Variation required? Yes No Recommendation from GBSLEP Approved Rejected Deferred (detail: )
Justification of decision The start of the JQTH project was delayed but is now currently progressing and well underway delivering on its required outputs. Works to the Chamberlain Clock Tower are due to complete in Spring 2021 and other public realm works have focussed on reinstatement of pavement lights. There is no alternative source of funding available if an extension to the GBSLEP funding is not approved which would have a serious impact on the project budgets which would leave a gap in the existing programme of anticipated works, impacting on its ability to deliver the project outputs and outcomes.
There is headroom in the GPF to agree to vary the existing grant funding agreement as per the proposed change request.
Decision date 3 March 2021
Does this change impact SEP No objectives?
Does the business case need to be No reviewed and updated, in light of the change?
Signed LEP Programme Manager/ Kerry Billington, Interim Programme Consultant Project Champion
Dated 16 February 2021
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GREATER BIRMINGHAM AND SOLIHULL PROGRAMME DELIVERY BOARD 3 MARCH 2021 CONTINUATION OF BIRMINGHAM CITY COUNCIL AS GBSLEP ACCOUNTABLE BODY IN 2021/22
Recommendations The GBSLEP Programme Delivery Board is requested to: 1. Recommend to GBSLEP Board to approve the continuation of Birmingham City Council (BCC) to be the Accountable Body for all existing and new capital funds in 2021/22.
Background 2. On 21 March 2017 BCC Cabinet approved BCC continuing to act as the Accountable Body on behalf of the GBSLEP for funding received as part of the Growth Deal process (Growth Deal 1, 2 and 3) and for additional section 31 Grants received from HM Treasury to support specific projects. This included receiving and administering funding over 2017/18 to 2020/21 financial years to support the delivery of projects that are accepted onto the Local Growth Fund Programme. 3. At its meeting on 27 March 2019, the LEP Board agreed that GBSLEP Ltd should become a fully active and independent company. As part of the new Future Operating Model (FOM), the Board agreed that it would like BCC to continue to be the Accountable Body for all capital funding. It agreed that this model should be in place from 1 July 2019. 4. At its meeting on 14 May 2019, BCC Cabinet approved the transfer of revenue funds held by the Council to GBSLEP Ltd. It also agreed to continue to be the Accountable Body for all existing capital funds. As the FOM significantly altered the relationship between GBSLEP and BCC as its Accountable Body (AB), it was agreed that a new AB Agreement was needed. 5. This AB Agreement was entered into on 30 August 2019 and sets out the relationship and respective roles and responsibilities of BCC as Accountable Body and the GBSLEP. 6. On 6 June 2019, GBSLEP considered a report which updated them on the implementation of the GBSLEP future operating model, including approving the revised Accountable Body Agreement by the Chair, in consultation with the Future Operating Model Committee. The Agreement also covered the ‘Joint Working Protocol’. 7. The ‘Joint Working Protocol’ was intended as a pre-cursor to a more detailed service level agreement (SLA) between GBSLEP and BCC as the LEP’s AB for the provision of financial and legal services necessary to deliver GBSLEP’s capital Growth programme, including how the Executive is able to claim eligible capital spend from the Local Growth Fund (LGF) held by BCC. In addition, the protocol incorporates the City Centre Enterprise Zone governance as agreed in June 2019. 8. The term of the AB Agreement was from the date of agreement until 31 March 2021. GBSLEP Capital Funding 9. The LGF Programme reaches financial completion on 31 March 2021, whereas all funding has to be expended by that date. This is expected to be achieved by that date with the exception of £1.30m for the Snow Hill Public Realm project, which will be managed in 2021/22 using the AB ‘freedoms and flexibilities’ to move capital budgets between programmes.
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10. The LGF programme also accepted some £21.85m returned to it from Department of Transport in September 2020 with the same financial completion timescale. However, given the short timeframe to approve, contract and expend that funding by 31 March, GBSLEP received confirmation from the Government’s Cities and Local Growth Unit (CLG) that £3.6m of this funding could be carried over to 30 June 2021. 11. GBSLEP also received £14.83m capital Getting Building Funding (GBF) in December 2020 awarded to deliver two projects. This funding must be expended by 31 March 2022. 12. In addition to the LGF and GBF capital funding, BCC also acts as the Accountable Body for GBSLEP’s City Centre Enterprise Zone. An updated Memorandum of Understanding about the roles and responsibilities of BCC and GBSLEP to ensure mutual understanding of the contributions each organisation is making, the role of each party and the risks and benefits accruing to each party was presented and approved by PDB in December 2020 and GBSLEP Board in January 2021 as part of the updates to the Assurance Framework.
Continuation of BCC in the role of GBSLEP Accountable Body 13. BCC, in its role of AB, has been responsible for holding the capital funding received through the Growth Deal process and more recently through the Getting Building Funding process and has ensured that funding is discharged in accordance with Government requirements, financial regulations and the decisions of the GBSLEP in accordance with its Assurance Framework. The funds are accounted for separately to the funds of BCC. Legal agreements are put in place between BCC and funding recipients to set out terms and conditions for use and application of capital funding to deliver agreed outputs and outcomes and requires repayment of funding if conditions are not met. 14. There are well established local processes, procedures and systems in place between BCC and GBSLEP to ensure the timely defrayment of capital funding in a transparent way to achieve the aims of the GBSLEP Strategic Economic Plan/LIS. The Assurance Framework is in place to ensure that resources are spent with regularity, propriety and offer value for money. There is a well-established and very good working relationship between the GBSLEP and BCC to ensure financial and legal compliance with any terms of capital funding offers from Government. It is therefore recommended that BCC continues in its role of Accountable Body for all GBSLEP existing and new capital funding to 31 March 2022. Legal Implications 15. A new AB Agreement, or Deed of Variation, will need to be drafted and entered into and the Joint Working Protocol will need to be updated to reflect this continuation of BCC as the Accountable Body for GBSLEP for all capital funding. As this Agreement will need to be in place by 1 April 2021, delegated authority will be sought for the Interim LEP Chief Executive to approve this Agreement. The Agreement and Joint Working Protocol will also need to be agreed by BCC following approval to enter into the Agreement by Programme Delivery Board and GBSLEP Board. Financial Implications 16. There is an annual charge paid to BCC from GBSLEP for the role of Accountable Body. This charge includes, but is not limited to, finance, payroll and treasury management services. This continuation to 31 March 2022 will attract a further annual charge and will be subject to agreement between GBSLEP and BCC. Conclusions 17. BCC has acted as Accountable Body on behalf of the GBSLEP for funding received as part of the Growth Deal process since 2016/17 financial year to date to support specific
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projects. This includes receiving and administering funding over those years to support the delivery of capital projects. 18. There are well established local processes, procedures and systems in place between BCC and GBSLEP to ensure the timely defrayment of capital funding in a transparent way to achieve the aims of the GBSLEP Strategic Economic Plan/LIS. The Assurance Framework is in place to ensure that resources are spent with regularity, propriety and offer value for money. There is a well-established and good working relationship between GBSLEP and BCC to ensure financial and legal compliance with any terms of capital funding offers from Government. It is therefore recommended that BCC continues in its role of Accountable Body for all GBSLEP existing and new capital funding to 31 March 2022.
Prepared by: Kerry Billington, Programme Management Consultant Reviewed by: Christian Cadwallader, Programme Management Consultant
Contact: [email protected]
Date Created: 1 March 2021
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