Greater Birmingham and Solihull LEP Birmingham City Centre Enterprise Zone Investment Plan 2013/14 to 2022/23
July 2014 Contact
Economy Directorate Birmingham City Council
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Plans contained within this document are based upon Ordnance Survey material with the permission of Ordnance Survey on behalf of the Controller of Her Majesty’s Stationery Office.
© Crown Copyright. Unauthorised reproduction infringes Crown Copyright and may lead to prosecution or civil proceedings. Birmingham City Council. Licence number 100021326, 2014. Contents
Foreword 3
Introduction 4
Progress 6
Investment strategy 10
Investment programme 16
Financial strategy 22
Economic impact of the EZ investment programme to 2022/23 28
Governance and project delivery 30
Appendix 32 Risk register
contents / birmingham city centre enterprise zone investment plan Birmingham Curzon concourse entrance
birmingham city centre enterprise zone investment plan / foreword Foreword 3
The Birmingham City Centre Enterprise Zone (EZ) is truly exciting. It is enabling us to deliver significant growth and jobs for the benefit of the whole of the Greater Birmingham and Solihull area.
One of the major benefits of the EZ designation is the ability for the Local Enterprise Partnership (LEP) to retain all of the uplift in business rates in the Zone for 25 years from April 2013. This is providing opportunities to support the delivery of the EZ and achieve our wider objectives for the LEP area.
Since we launched the EZ in April 2011 we have turned this transformational initiative into reality. We have published a Business Case, Implementation Plan and Prospectus setting the scene for the EZ, explaining how it operates and detailing the strength of our offer. We have approved two Local Development Orders for the Digbeth and Birmingham Science Park Aston areas which streamline the planning system. Real progress has also been made in securing the type of world class digital infrastructure businesses need. Developments are starting to be delivered on the ground and extensive marketing to promote the opportunities in the EZ is building momentum. Importantly we are on course to have created 2,500 jobs by the end of 2015.
This updated Investment Plan is a key piece of the jigsaw that will enable us to continue to drive forward development and growth in the EZ. It will also support the delivery of the Strategic Economic Plan and enable the area to maximise the benefits of HS2. While the opportunity that the EZ presents for generating new jobs is considerable, some key interventions are needed to enable development to get off the ground quickly and maintain delivery. These projects respond to the needs of the private sector community and the desire to create truly long term economic growth.
We are confident that the programme of investments set out in this plan, funded with the resources generated by the EZ, will have a catalytic impact on driving forward the delivery of this groundbreaking initiative.
Andy Street Chair of the Greater Birmingham and Solihull Local Enterprise Partnership
foreword / birmingham city centre enterprise zone investment plan 4 Introduction
Over its lifetime the Birmingham City Centre Enterprise Zone (EZ) will have delivered 1.4 million sq.m of new floorspace, created over 40,000 new jobs, contributed nearly £2bn to the economy in GVA per annum and generated in excess of £1,700 million in additional business rates.
This Investment Plan sets out how in November 2011. These Services, Financial Services, Digital the uplift in business rates will be documents set the direction for the Media, Creative Industries and ICT) used to deliver the investment development of the EZ project. in which the City has a competitive in infrastructure to unlock advantage in conjunction development and growth in the The Business Case specifically with intelligent targeting of City Centre EZ. outlined the barriers to growth and site marketing, will minimise how the EZ could begin to remove displacement and maximise real It has been prepared by these and act as a catalyst to the growth. Birmingham City Council (BCC), as delivery of development. The 26 Accountable Body for the EZ, on sites included in the EZ are those The process and timescales for the behalf of the Greater Birmingham identified in the Big City Plan (BCP) establishment of the EZ, as well as & Solihull LEP (GBSLEP). where the greatest opportunities the structures required to deliver for growth currently exist, but the operational elements have The strategy contained of the where successful redevelopment been set, with the LEP as strategic Investment Plan supports the and occupation is currently lead and BCC as the Accountable Business Case, submitted to constrained by infrastructure Body. Government in July 2011, and an limitations. The focus on those key Implementation Plan submitted sectors (Business and Professional
KEY EZ Sites EZ Local Development Order n NORTH
The Birmingham City Centre Enterprise Zone
birmingham city centre enterprise zone investment plan / introduction 5
The approach to investment the EZ. It covered a five year on projects which formed part of builds upon the recognition that investment programme period. the initial Investment Plan. It also early intervention is required to Positive progress has been made identifies the interventions that accelerate growth in the City in delivering these projects and the need to be made in the longer Centre - an area which has both EZ. term to attract inward investment, the capacity and characteristics engage potential occupiers and to accommodate significant new The Investment Plan has now act as the catalyst for change in the employment-creating business been updated to provide a longer City Centre and beyond. activity in key sectors, and for which term approach to investment (to a strategic framework for growth is 2022/23) to drive forward economic Set out within this Investment Plan in place in the form of the BCP. growth. is the programme of projects worth up to £275 million to be delivered The Investment Plan Since the original Investment by 2022/23. The projects cover nine The original Investment Plan was Plan was prepared, further key themes: published in July 2012. It set out details are now known about the • Site Development and Access. an initial programme of projects Government’s High Speed 2 (HS2) • Infrastructure. valued at £128 million targeted proposals and the infrastructure • HS2 Growth Strategy. at kick starting the delivery of required locally to maximise the level of growth that this opportunity • LEP Investment Fund. will bring. • Digital Connectivity. • Business Development and The EZ and HS2 are also key Support. parts of the GBSLEP Strategic • Skills Development. Economic Plan (SEP) (published in March 2014), which identifies four • Simplified Planning. investment programmes to support • Marketing. the economic growth of the area. The financial resources identified in The headline investments within the the Investment Plan will support the programme are the redevelopment implementation of the SEP through of Paradise Circus and Southern the delivery of the EZ and other Gateway, extension of the Metro projects. to Centenary Square, funding to maximise the benefits of HS2 and Since the introduction of the EZ support growth in the LEP area over two years ago, there is now and the provision of high quality more certainty about the levels of and safe connections to economic income from the business rates opportunities for SME’s in Digbeth uplift that EZ sites will generate. and the Jewellery Quarter. A number of developments have already been completed, with a The programme of investments, pipeline of new accommodation set out in this plan, will unlock the under construction or with planning growth potential in the EZ and permission. This certainty gives the support the delivery of the LEP’s LEP more confidence to develop a objectives for the region. This will longer term investment strategy to have a crucial role in strengthening support our growth aspirations. the region’s economy drawing in private sector investment and This update reflects the progress stimulating job creation. and decisions that have been made
introduction / birmingham city centre enterprise zone investment plan 6 Progress
This section sets out the progress that has been in delivering the EZ since 2011. It sets out the decisions that have been made to support and attract investment, as well as the progress made in delivering development sites and creating accommodation in the City Centre for businesses.
Investment A public hearing was held at the which comprised loan and/or Investment Programme end of 2013, and the CPO has now grant funding. A healthy amount Programme been confirmed. of interest was received, with the potential to bring some sites Since its inception, there has Excellent progress has been made forward for development sooner been significant progress made on this project with a number of key than expected. The first tranche of on one of the most ambitious milestones being met, including funding is expected to be awarded and complex EZ’s in the UK. This the delivery of the new Library of in Summer 2014. includes financial commitments Birmingham in September 2013. that will support and enable sites The development remains on track within the EZ to come forward for to start on site in 2014/15, with Infrastructure the first buildings available for development. This investment is Metro Extension and Centenary occupation from 2017/18. also being matched by the delivery Square improvements of new development on EZ sites. The Metro Extension to Broad Southern Gateway Street and refurbishment of The following progress has been In early 2014, BCC Cabinet and the Centenary Square were identified made: LEP agreed to direct investment as key infrastructure proposals in into the development of the the Investment Plan (£25 million Site access and development Southern Gateway EZ site. The £10 contribution to a £42.4 million million investment will support the project) which will support the Paradise Circus relocation of Wholesale Markets Paradise Circus is a major proposed development of Paradise Circus from the EZ site to enable the and Arena Central sites. intervention for the LEP and BCC, redevelopment of this important and formed a critical part of the City Centre site. Masterplanning A Full Business Case is currently Investment Plan utilising £61.3 will take place in 2014, with site million. A number of key milestones being prepared for this preparation for development to project following the release have been achieved since this initial start expected in 2017. Whilst investment was identified. of development funding by this project did not form part of BCC Cabinet in 2013. The EZ the original Investment Plan, the contribution of £25 million is being At the beginning of 2013, outline opportunity this site offers will planning consent was granted for supported by funding from the significantly benefit the delivery of Local Transport Board (£8 million), the redevelopment of the area to the EZ programme. create a new urban block at the Centro (£5 million) and developer heart of the City Centre including contributions (£4.4 million). A Direct site investment revised Transport and Works Grade A office accommodation £15 million was identified in and opportunities for retail and Act Order was also submitted to the Investment Plan to support the Department for Transport in hotel uses set within a high quality property development coming environment. At this time, the LEP December 2013, together with the forward on EZ sites (other than Land Acquisitions and Variations Board also agreed the investment Paradise Circus). At the start of decision to release the funding Order to obtain rights over land to 2014, BCC Cabinet approved construct the Metro. The scheme to help bring forward the first the business case to take this two phases of the site. This led to is programmed to start on site in investment to the development 2015/6 the approval of the Joint Venture industry, and good progress has agreement with BCC, Argent and been made in delivering this Connecting economic British Telecoms Pension Fund. funding. opportunities The Investment Plan identified During 2013, BCC made a Expression of interest applications £17.9 million to fund a range of Compulsory Purchase Order (CPO) were invited from developers and projects to enhance connectivity to unify land ownership of the site. site owners to bid for funding, and create safe and attractive
birmingham city centre enterprise zone investment plan / progress 7
routes to EZ sites in the Snowhill, Additional resources to support • One Station Digbeth, Jewellery Quarter and this programme have also been In support of the EZ Connectivity Eastside areas. Progress has been secured through the Making the Programme, a £5.5 million high made on a number of projects, and Connections (MtC) project, which quality public realm scheme is there has been a strong degree of is for a series of public realm being developed for the link success in attracting match funding enhancements around New Street between New Street Station and for these schemes, with £3.4 million Station linking Paradise Circus, Moor Street Station. This scheme of EZ funding leveraging in £19.5 Arena Central and Southern will support the investment that is million of other funding. Gateway EZ sites. In May 2013, underway at New Street Gateway, an Outline Business Case for the future investment at Birmingham • City Centre Ring Road MtC project was submitted to the Curzon HS2 Station, and will To ensure direct access is Local Transport Board (LTB) for improve access to EZ sites in maintained to the EZ sites via Local Major Scheme Funding. In Eastside and Digbeth. an efficient road network, a set September 2013 the project was of essential junction capacity awarded £6.8 million as part of an The scheme has received enhancements at key locations £8 million programme. EZ funding programme entry approval for on the Ring Road were identified. of £0.4 million was identified as £3.5 million of funding from the An outline business case was part of the match funding for the LTB Local Major Scheme Fund. EZ developed for a package of works scheme. A Full Business Case for funding of £1 million was identified worth £9.4 million. Funding for the the project will be developed by as part of the match funding scheme includes £2 million from December 2014. for the scheme with a further £1 the EZ and £3.9 million from the Department for Transport Local Pinch Points Fund. Full Business Cases are under development for the project, with the first schemes due on site in 2014/5.
• EZ Connectivity Programme and Making the Connections Project Work has commenced on developing a programme of works to enhance a number of links between EZ sites, as well as the main transport connections into the City Centre. These enhancements will be delivered through a public realm improvement programme. Early consultation has been carried out and a number of potential routes have been identified, including links to Snow Hill, Jewellery Quarter, New Street, Southside and Digbeth/Eastside. Consultants have been appointed to assess the options available to deliver enhancements to these routes within the budget available. The options assessment will be completed by the end of 2014. Birmingham City University at Eastside
progress / birmingham city centre enterprise zone investment plan million from Centro/the Integrated Measurement Total 8 Transport Authority. A Full Business Case for the project will be Number of new employment positions filled. 215 developed by December 2014. Number of new enterprises. 13
Digital connectivity Amount of land developed or redeveloped (ha). 1.5 BCC and its partners have New floorspace created developed a package of measures (gross internal area in sq.m - new and refurbished). 55,800 to enhance digital connectivity for EZ sites as part of a wider package Public sector investment committed (gross, £m). 165.2 for the City. Following BCC Cabinet approval in January 2014 of the Private sector investment committed (gross, £m). 588.5 Full Business Case, funding has been put in place for the project Table 1 EZ measure of success to June 2014 from the Urban Broadband Funding (£6.75 million), European Regional Development Funding (£2.29 million) and the EZ (£0.4 million). The scheme comprises Grade A office accommodation, various elements, including a Site Delivery plus retail floorspace. Occupiers are voucher scheme providing micro Site Delivery already in the building (including grants designed to encourage the a serviced offices provider), and uptake of high speed broadband The delivery of the 26 sites Wragge, Lawrence, Graham & Co is connectivity and demand within the EZ is crucial to the expected to move into over half of stimulation activities. overall success of the investment the available floorspace in Summer programme and the performance 2014. The programme was launched of the local economy. New in the City Centre in early 2014, developments are expected to • Birmingham City University - focussing on businesses in the come forward throughout the Phase 1 EZ. Early indications show a lifetime of the EZ, reflecting The Parkside Building, the strong interest in the scheme the long lead times that are landmark first phase of the with the majority of applications needed to bring forward large University’s new City Centre originating in the EZ area. A large scale developments and the campus, opened to students marketing campaign will follow, demand in the market for new in September 2013. The and applications to the scheme are accommodation. accommodation brings together expected to accelerate. the art, design and media Encouraging progress has been departments into a building with made on the delivery of new state of the art facilities, including Marketing developments in the EZ (see the largest broadcast centre in any In early 2013, the EZ Prospectus Table 2 opposite), in addition to UK university. was successfully launched to the progress made on Paradise 200 property and investment Circus. This reflects the efforts of • University College of Birmingham professionals at Birmingham Town BCC and its public and private - Phase 1 Hall. The Prospectus sets out the sector partners in bringing forward This development is the first phase development opportunities and the development and infrastructure of a wider campus which will be benefits the EZ offers across the 26 to support the delivery of the EZ, delivered by the University. The sites. The launch was attended by despite the challenging economic building was completed in late the Chancellor of the Exchequer conditions. Spring 2014, with occupation and generated significant local and expected in time for the start of national media coverage including the new academic term in Autumn. the Financial Times, the Telegraph, Completed developments The building features a range trade press and the BBC. • Two Snowhill of teaching rooms and lecture Birmingham’s largest office theatres with the latest audio and Since its inception, the EZ has also development since the onset of visual learning technology as well been extensively marketed at other the credit crunch was completed as a café and post graduate and events, including sales missions at Two Snowhill and launched to learning centres. The building and at MIPIM, the international real the market in 2013. Two Snowhill can accommodate up to 2,500 estate trade fair. includes almost 30,000 sq.m of students.
birmingham city centre enterprise zone investment plan / progress Other progress • Other Site Investment • Birmingham Curzon HS2 • Site Development In addition to the Direct Site Masterplan 9 There has been a significant Investment fund, Birmingham City The Birmingham Curzon HS2 amount of activity on other EZ Council has agreed to use its own Masterplan has been prepared sites to bring new development borrowing powers to offer loans to ensure the City Centre makes forward. This includes six schemes to support development at Arena the most of the investment going currently under construction Central and iCentrum (Digital Plaza) into the proposed High Speed which will deliver a range of EZ sites. This funding will be used 2 terminus. The Masterplan was commercial floorspace, enhanced to bring forward early phases of launched 27th February 2014, and education facilities, additional development on these sites. These will be finalised in 2014. It will help hotel accommodation and car works are expected to start in drive forward the delivery of 12 EZ parking in the City Centre. A 2014/15. sites in the Eastside and Digbeth number of planning permissions areas. have also been granted, signifying The development of the new the progress that is being made Assay Office on the St George’s in bringing sites to the market. Urban Village site has also been This includes development sites supported with £1.2 million grant for office, hotel and other uses on from the European Regional Arena Central, Snowhill Building Development Fund (ERDF). 3, Eastside Locks and Great Barr Additional resources from ERDF Street. are also identified for small scale developments on EZ sites.
Development Floorspace created/ Type of Jobs Status refurbished (GIA) accommodation estimate
Two Snowhill. 30,500 sq.m Grade A offices, plus retail. 1,750 Completed, awaiting occupation.
BCU (Phase 1). 18,300 sq.m Education facilities. 200 Completed and occupied.
Former Post and Mail Building 22,390 sq.m Car park and retail. 100 Under construction. (Phase 1).
University College of Birmingham 7,000 sq.m Education facilities. 25 Completed, awaiting (Phase 1). occupation.
BCU Phase 2, Eastside Locks. 24,300 sq.m Education facilities. 265 Under construction.
Ladbrook House, Typhoo Wharf. 2,100 sq.m Hotel. 15 Under construction.
Assay Office, St George’s Urban 5,700 sq.m Office and light industrial. 150 Under construction. Village.
Beorma (Phase 1). 8,700 sq.m Mixed use comprising offices, 250 Under construction. hotel, retail and leisure.
109-111 Pope Street, St George’s 640 sq.m Offices. 5 Due to start on site Urban Village. 2014.
Garrison Data Centre 1, Great Barr 7,500 sq.m Data centre. 30 Due to start on site Street. 2014.
Extensions to existing businesses, 480 sq.m Offices. 65 Due to start on site Warwick Bar. 2014.
Hotel, Newhall Square. 7,770 sq.m Hotel. 35 Under construction
Total 135,380 sq.m 2,890
Table 2 Based on present activity, developments in the EZ expected to have been completed by 2015
progress / birmingham city centre enterprise zone investment plan 10 Investment strategy
The Strategy of the Investment Plan has been developed in direct response to the needs of businesses, landowners and developers within the EZ by identifying the key interventions necessary to help unlock growth and enable development. This strategy forms the basis of the Investment Programme which sets out a series of projects and interventions.
Following the launch of the EZ, to help champion individual To deliver significant growth will BCC engaged with developers/ schemes would be of significant require increasing the pace of landowners that have a direct benefit to the speed of delivery. business space provision for the interest in one or more of the sites The final issue that many saw key economic sectors which entails within the EZ. This engagement was as a direct restriction to starting over-coming site specific and initiated through an introductory development was the availability market constraints. These include: presentation in December 2011 of tenants and the promotion of and followed up by one to one the City as a place to invest. This meetings with each developer/ would be partially aided by the EZ Supply of business floorspace in landowner in January 2012. The designation but targeted marketing key sectors purpose was to communicate the would be needed to promote the In respect of Grade A office space aims of the EZ, with the follow up overall offer. for the financial and business meetings providing the opportunity services sector post 2013 there It is clear that from both the to discuss individual sites and the is limited supply in the Central developer/landowner community constraints to development. Birmingham office market. Based and existing strategy work upon long term trends of demand through the BCP that there is This allowed a clear understanding the market will reach a shortfall significant growth potential but of the obstacles to growth and how position in 2015/16 (see Graph 1 also constraints to delivery which the EZ could enable development. opposite). Of the 21 separate discussions if targeted and unlocked will spur development. The messages are that took place 85% of the This is a key issue as it will: developers/landowners identified clear that if the EZ and the local economy are to be successful, that investment was needed in • Limit the potential to attract then upfront action is required infrastructure and general access inward investment in key to kickstart development activity, to their specific site. In particular opportunity areas such as back support the implementation of the the public transport and pedestrian office, shared services and LEP Strategic Economic Plan and routes were of concern with the headquarters functions. need to create safe environments maximise the benefits of HS2. attractive to investors and business. On this basis, the Investment Plan • Disadvantage the LEP in sets out a strategy to address the respect of restructuring of major Whilst many acknowledged that following key issues: international and UK players in investment is already being made the financial services sector as in infrastructure, such as New they respond to global factors. Street Station, this was cited as addressing past deficiencies and Site Access and • Limit the LEP’s ability to meet more was needed to deliver the SiteDevelopment Access and Development indigenous demand focused aspirations for the City and help around lease events between unlock EZ sites for development. Businesses need space to establish 2013-2022, which may lead to and grow. This ranges from Grade functions in these businesses More site specific issues affecting A office space in prime locations leaving Birmingham and the West the ability to get development focused on the corporate sector Midlands. moving was access to funding, to cheap flexible space for newly with 53% identifying that funding, established creative industries. The be it gap or building specific, was EZ has to maintain and develop a Responding to the economic required. In all cases planning range of opportunities for business growth potential of key sectors was not seen as a direct barrier to and promote them to appropriate The EZ focuses on those sectors growth however 76% stated that a markets. that are already clustered in the project champion with the capacity City Centre and where there is
birmingham city centre enterprise zone investment plan / investment strategy 11
a competitive advantage to aid 1200000 future growth. Of these, Financial & Business Services is expected to represent the highest proportion 1000000 of total Gross Value Added growth in both Birmingham and the wider LEP area, with associated employment growth, as shown 800000 in the Table 3 below. This growth potential needs to be supported by investment to ensure it is delivered in the Birmingham and LEP area. 600000
Supply of creative industries 400000 business space This a growing and vibrant sector particularly in Eastside, Digbeth and the Jewellery Quarter with Grade A availability (Sq.ft) New and refurbished 200000 Tipping 1000’s of firms. point
Typically this sectors space needs 0 are met through the refurbishment 2008 2009 2010 2012 2013 2014 2015 2016 of existing buildings (for instance Year end the Custard Factory) or Science Grade A supply (availability and completions less average take-up) Parks. Both of these are challenging in investment terms in the Demand (assumed conservative average annual Grade A take-up) current economic climate and Source: GVA (March 2013). require commitment by specialist Graph 1 Supply of business floorspace - developers supported by long term Birmingham City Centre office market ‘tipping point’ commitments and investment.
Sectors/sub-sectors Birmingham LEP Supply of sites A key barrier to the delivery GVA growth 2012-2025. of sites for development is infrastructure provision. This is Financial and Business Services. +60.0% +64.0% particularly important in shaping - Computing Services. +106.5% +122.9% new environments responsive to modern business needs which can - Banking and Finance. +74.2% +68.2% mean reducing highway impact as a barrier to investor and occupier Sectoral employment change 2012-2025. perceptions. Financial and Business Services +16.1% +18.0%
The City also needs to achieve a - Insurance +35.8% +27.0% step change in green infrastructure Source: Cambridge Econometrics provision to complement its activity in digital infrastructure. Table 3 Economic growth potential in key sector
investment strategy / birmingham city centre enterprise zone investment plan Green infrastructure provision such Mobility Action Plan (BMAP) Green However local investment will be 12 as combined heat and power are Paper (2013) sets out the overall required to maximise the potential important to convincing occupiers transport vision and priorities for of the scheme. HS2 will not be able that they can achieve corporate action in the City Centre. to deliver all of its benefits without credentials in environmental impact actions within the local area to which are now a major location The emphasis that these plans deliver supporting infrastructure factor. place on high quality connections and to coordinate the delivery of recognises the important development. The City Council, contribution this makes to the the LEP and Centro will produce a Availability of access to economic performance and success HS2 Growth Strategy by April 2015, development finance of an area alongside the public with local resources required to The availability of commercial transport offer. This has been implement its proposals. funding had been severely curtailed identified through considerable during the recession and only research conducted by CABE, high quality schemes with strong ECOTEC, Gensler and by Professor covenants and significant pre-lets Michael Parkinson CBE. The LEP Strategic had been able to secure funding for key proposals for improving the LEPEconomic Strategic Economic Plan Plan new development. As the national connections within and beyond the economic picture has improved, City Centre are set out in the BCP In March 2014, the LEP published there is now more confidence in the and BMAP. its Strategic Economic Plan investment market with banks and (SEP) which sets out the actions funders offering improved terms This research acknowledges that needed to re-establish Greater on access to development finance. improvements to the quality of Birmingham’s role as the major Whilst these changes are positive, connections plays a vital role in driver of the UK economy outside there are still challenges to securing maintaining a competitive edge London. Five ‘game changes’ are appropriate levels of investment to fundamental to the ability of urban identified which are fundamental to deliver development. areas to compete successfully drive growth, which are supported with other major cities. There is by four programmes to deliver the a strong correlation between the overall strategy. ability of businesses to build a Infrastructure good quality image and reputation, The EZ is a key objective for the Infrastructure which provides a basis for growth, delivery programme for the SEP as with the existence of high quality part of strengthening Birmingham As an economic entity the EZ connections. City Centre as the regional hub needs to provide fast and reliable for economic activity. The early connectivity into regional, national success of the EZ is already helping and international labour and High Speed 2 to deliver against the objectives of product markets. In this respect High Speed 2 the SEP. connectivity is not simply physical but also digital. HS2 is a once in a century Following the submission of the opportunity to radically enhance SEP, the LEP has been allocated Alongside this is the growing the LEP area’s national rail £357.3 million from the Local importance of the quality connectivity and accelerate its Growth Fund for 2015-2021. This and safety of the pedestrian economic growth potential. For includes £38.7 million of new environment to connectivity and Phase 1 of HS2, London and funding for 2015/16. Further impressions of place quality, which Birmingham will be linked reducing resources will be required from in turn support labour market journey times from 1 hour 24 the public and private sectors to retention and investor confidence. minutes to 49 minutes. The line achieve the overall strategy. will also facilitate the scope for To underpin the importance of future improvements to local and With the EZ firmly established, the infrastructure to economic growth regional rail services on the existing approach set out in the Investment the Vision for Movement was network. The programme will bring Plan of borrowing against future produced in 2011 in support of the significant numbers of new jobs business rates uplift offers an principles set out in the BCP. This and visitors to the City and help important local funding resource is a vision shared and prompted promote investment. which can help support the delivery jointly by the City Council, Centro of projects in the SEP. and the four City Centre Business The new line and stations in the Improvement Districts representing LEP area will provide a catalyst to the importance this agenda has transform areas of the City Centre for the business community in the and unlock major development City. More recently, the Birmingham sites, including sites in the EZ.
birmingham city centre enterprise zone investment plan / investment strategy Business To reduce both of these, a broader Digital Connectivity business support package will act 13 Digital Connectivity BusinessDevelopment Development as a counter weight to location decisions in those areas particularly To be successful cities must Generating economic growth exposed to displacement such function as smart cities with through a supportive business as Digbeth, Jewellery Quarter connectivity to customers, markets environment will require a and Eastside. In these areas high and collaborative businesses coordinated package of financial numbers of small businesses on being of the highest quality. Those incentives tailored to growth short or flexible leases are more cities which secure competitive sectors. exposed to marginal changes in advantage in this field will be the costs and more able to move freely ones with the greatest proposals As part of the approval of the EZ in the property market. for economic growth. it is a key requirement from DCLG that the LEP provide measures to In order to achieve the wider The Digital District area of Digbeth, reduce displacement of economic objectives of economic growth Eastside and Jewellery Quarter, activity. Displacement will occur the EZ will need to support which lies at the heart of the EZ, by. Firms moving into the locality businesses that have the potential is constrained by the absence of to take advantage of EZ business to grow. This will provide balanced affordable ultrafast broadband rate discounts who would otherwise investments to support and services and commercial have located elsewhere in the local compliment site development and communications operators do economy. infrastructure activity. not wish to deploy ultrafast infrastructure in regeneration areas where a commercial return is some years away.
• At present there is limited access to the fibre infrastructure needed.
• Competition, innovation and choice are extremely limited in the retail supply market so costs of accessing ultrafast broadband speeds are often unaffordable to the SMEs upon whose competitive growth the city depends.
• There are substantial coordination challenges involved in aggregating demand from SMEs to encourage a step-change in investment to deliver the longterm high speed solution needed.
Unless these issues are addressed, the EZ and wider LEP economy will miss out on the positive spillover externalities which competitor areas in the UK and European cities will be able to capitalise upon due to their commitment to investing in this infrastructure.
Masshouse Square
investment strategy / birmingham city centre enterprise zone investment plan With the loss of the major projects 14 Skills Development team, ongoing delivery will require Skills Development additional capacity to ensure that the Local Planning Authority To ensure that jobs are secured by can respond and progress major local people from within the LEP schemes rapidly through the area we need to ensure access to system. these opportunities are promoted and channelled to a LEP wide Project champions with the capacity audience. to champion schemes will play a key role in supporting delivery as Supporting skills development will identified by the private sector both maximise the impact of the EZ community. and support growth businesses.
The EZ has the potential to significantly increase the number Marketing of jobs, both within the EZ and Marketing the broader supply chain across the LEP. The development of the To be successful the EZ will need to EZ and the consequential change market its potential encompassing in the business make-up and both the corporate sector and occupational profile of the area smaller creative industries will result in an increased demand demonstrating its potential and for particular skills at all levels, successes. attracting highly qualified staff and potentially supporting the retention The EZ offers an opportunity of graduates within the City and to promote economic growth wider area. and enterprise to both inward investment and indigenous For the EZ to succeed and attract markets. To maximise impact these and grow businesses, employers opportunities need to be marketed will need to have access to the to their fullest. right people with the relevant skills. There is also a vital role in delivering the EZ for supporting work with the Universities, Colleges and other providers linking people EZ Delivery Team to jobs. EZ Delivery Team
The Investment Programme identified in this Plan will need to Simplified Planning be implemented by BCC which Simplified Planning will require effective management. Dedicated project managers will be A critical success factor for the EZ is necessary to ensure funds are spent a supportive regulatory regime for and projects progressed quickly to delivering economic growth. enable the associated development of EZ sites. A key objective of the EZ is to streamline the planning process to enable proposals for development to be dealt with in a timely and efficient manner whilst removing unnecessary burdens. BCC is supportive of this principle and has already committed available resources to delivering this, however the scale of the Zone and nature of development activity will require dedicated resources.
birmingham city centre enterprise zone investment plan / investment strategy 15
Birmingham Curzon internal concourse towards Station Square
investment strategy / birmingham city centre enterprise zone investment plan 16 Investment programme
The Investment Programme has been designed, on the basis of the Investment Strategy, to target funds to a range of projects that will help unlock sites for development and enable the delivery of the growth, jobs and uplift in business rates. The investments will focus on those sites with the highest potential to deliver development in the early years and so kickstart the success of the EZ.
The investment of EZ resources wider priorities once the EZ • An Approved Programme into the City Centre will be used to resources have supported the City worth £128 million, based on draw in match funding from other Centre. investments identified in the sources, including some public original Investment Plan. sector and significant private sector Table 4 below sets out the total resources. Crucially this Investment Investment Programme worth £275 • An Additional Programme worth Programme will enable the EZ to million. £147 million, as set out in Table start generating the significant 5, to be brought forward when levels of business rates which will The investment programme business rates income resources enable the GBSLEP to support comprises: allow.
2013/ 2014/ 2015/ 2016/ 2017/ 2018/ 2019/ 2020/ 2021/ 2022/ Total 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 (£m)
CAPITAL Site Development and access - Paradise Circus Phases 1, 2 and 3 - 16.97 27.27 16.23 1.86 10.07 3.88 7.39 4.12 - 87.79 - Direct investment into other 25 sites - 1.23 3.72 10.00 ------14.95 - New Wholesale Markets - - 10.00 ------10.00 - Southern Gateway site remediation - - 2.00 6.14 11.35 1.34 7.23 7.41 - - 35.47
Infrastructure - Metro extension and Centenary Square improvements 0.14 7.16 8.85 8.85 ------25.00 - Connecting economic opportunities - 2.26 5.00 8.00 2.40 - - - - - 17.66
LEP Investment Fund ------5.00 5.00 5.00 5.00 20.00 HS2 Growth Strategy - Curzon Station ------7.50 7.50 7.50 7.50 30.00 - Interchange site ------5.00 5.00 5.00 5.00 20.00
REVENUE Direct investment into 25 other sites - 0.05 ------0.05 Connecting economic opportunities - 0.21 ------0.21 Digital connectivity - 0.36 0.04 ------0.40 Business development and support - 0.77 0.79 0.80 0.82 - - - - - 3.18 Skills development - - 0.33 0.33 0.34 0.35 0.46 - - - 1.81 Simplified planning - 0.08 0.08 0.08 0.08 0.08 0.08 0.08 0.08 0.08 0.72 Marketing - 0.08 0.08 0.08 0.08 0.08 0.08 0.08 0.08 0.08 0.72 Delivery Team - 0.45 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 3.25 Accountable body 0.25 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 2.14 Sub-total 0.39 29.83 58.72 51.07 17.49 12.48 29.79 33.02 22.34 18.22 273.35 Inflation allowance - 0.06 0.09 0.14 0.19 0.13 0.18 0.13 0.14 0.16 1.22 TOTAL 0.39 29.89 58.81 51.21 17.68 12.61 29.97 33.15 22.48 18.38 274.57
Table 4 EZ Investment Programme - capital and revenue projects 2013/14 to 2022/23
birmingham city centre enterprise zone investment plan / investment programme 17
Key Activities 2013/14 to 2022/23
This development scheme has Southern Gateway Site Access and capacity to deliver 10,000 jobs and The Southern Gateway represents SiteDevelopment access and development provide approximately 180,000 the other major development site sq.m of development floorspace intervention and is a key proposal To facilitate the delivery of key focused upon approximately introduced as part of the update sites within the EZ £148.3 million of 150,000 sq.m Grade A office to the Investment Plan. The site is funding is required for site access floorspace. The scheme will also a strategic location to the south and development. The focus for fundamentally restructure the of the City Centre and represents this investment will be on Paradise highway network in the immediate a major opportunity to expand Circus, which has a well progressed area creating better linkages for the City Centre Core through business case, and the Southern pedestrians and transforming the comprehensive redevelopment to Gateway, which has an upfront wider business environment. deliver a vibrant new destination. It investment requirement to bring offers the opportunity to diversify the site forward. The remaining From a financial perspective the Birmingham’s leisure, retail and investment is targeted at a number Paradise Circus development will cultural offer, including niche of other sites requiring smaller over the life of the EZ generate retail, improved markets, family interventions in line with emerging £319 million of additional business entertainment, residential and business cases. rates. space for creative industries.
Paradise Circus Paradise Circus is a major proposed intervention for the initial phase of the Investment Plan utilising £87.8 million. This site is a strategic PROJECT £m location on the edge of the Connecting Economic Opportunities 10.00 Central Business District (CBD) representing a major opportunity HS2 Growth Strategy - Curzon Station 30.00 in economic terms to expand the financial and business services HS2 Growth Strategy - Interchange Site 20.00 sector but also in place making LEP Investment Fund 20.00 terms create a transformed environment between the City Paradise Circus Phase 1 and 2 Additional Resources 4.40 Core, Jewellery Quarter, and Paradise Circus Phase 3 22.10 Westside including the Library of Birmingham, National Indoor Arena Southern Gateway Site Infrastructure and Remidiation 35.47 and ICC. Simplified Planning and Marketing (additional resources for 10 year programme) 0.74 The amount of funding that will Delivery Team (additional resources for 10 year programme) 1.69 be directed to Paradise Circus from the EZ has been increased by Accountable Body Costs (additional resources for 10 year programme) 1.93 £26.5 million over the extended Investment Plan period to provide General Inflation to Revenue @2.5% 1.21 resources to complete the scheme TOTAL 147.54 and realise its full potential. Table 5 Projects forming part of the Additional EZ Investment Programme
investment programme / birmingham city centre enterprise zone investment plan Funding will be directed at two key This element will provide the vital 18 elements of the project to enable Infrastructure transport capacity linking those EZ delivery. The first contribution will Infrastructure sites in Westside with the existing be towards the development of rail network. the new Wholesale Markets site To enable the delivery of key sites at the Hub, Witton (not in the EZ £42.9 million of EZ funding will be In conjunction with the Metro but supporting the City Council’s utilised to improve public transport extension, £8.35 million of EZ Economic Zones programme) to infrastructure and connections. investment will be used to turn enable the Southern Gateway The focus for this investment Centenary Square into a key site to be redeveloped. The will be on extending the Metro gateway for the expanded CBD, second contribution will be on the to Broad Street supporting the building on improvements put Southern Gateway EZ site to create expansion of the CBD. Other funds in place as part of the Library developable and commercially will be utilised to provide safe and of Birmingham development viable building plots. £45.5 million direct access to sites supporting and complementing the Metro of EZ investment will be utilised in growth of SME’s and ensuring road extension. The additional highway total to bring the site forward. network capacity in the future. works in the area will be funded by other partners. The development has the potential Metro extension and Centenary These projects will improve to generate £139.5 million of Square improvements additional business rates over the connectivity for commuters, A key focus for investment will be life of the EZ. visitors and others and will have for the extension of the Metro line a major beneficial impact upon to Broad Street, improvements this part of the City Centre. The to Centenary Square and Other sites investment will directly support EZ complimentary highway works. While Paradise Circus and the site delivery by complementing The total funding in place for the Southern Gateway require investment at Paradise Circus and project is £42.4 million, with £25 intervention that will unlock their accelerating the delivery of Arena million coming from the EZ. growth potential generating Central. Over the life of the EZ, Arena Central will generate £112.5 significant business rates uplift, a A sum of £16.65 million will be million of additional business rates number of other sites identified utilised from the EZ, to bring the and approximately 4,000 jobs, in through dialogue with developers Metro line into the expanded CBD addition to those generated at and landowners require smaller but in Westside, building upon the Paradise Circus. equally important interventions. To existing £129 million committed to facilitate the delivery of other sites, delivering the new Metro line from £15 million will be utilised. Snow Hill to New Street Station. Connecting economic opportunities In order to create the environment that is attractive to occupiers £17.9 million is required to create safe and attractive routes to EZ sites in the Snowhill, Digbeth, Jewellery Quarter and Eastside areas. The existing routes from the City Core and main arrival points have been cited as a direct impediment to attracting new businesses to these areas that have significant potential to support growth in the digital, creative industries, ICT and business services sectors. Specific projects will include: EZ Connectivity Programme • Creating a business corridor in the Snowhill area to support the expansion of the CBD eastwards providing the environment commensurate with the Grade A office floorspace for the business Metro interchange with New Street Station service sector.
birmingham city centre enterprise zone investment plan / investment programme • Addressing the lack of direct and These investments will ensure proposals will support the delivery easy connections from the CBD the road network has capacity to of over 600,000 sq.m of commercial 19 across Great Charles Street at accommodate growth and provide floorspace as well as 2,000 homes. the Newhall Street crossing and efficient access for business. A number of key infrastructure Ludgate Hill. This will provide projects have also been identified seamless links supporting the in the masterplan to connect and expansion of the CBD north and HS2 Growth Strategy integrate the station into the City opening access from the City - Curzon Station and Centre. Capital funding of £30 Core to growth opportunities for HS2 Growth Strategy - Curzon million will be made available for SME’s. Stationthe and Interchange the Interchange this project. EZ sites in this area will contribute towards this growth and • The One Station project To maximise the benefits of have the potential to generate £497 connecting Moor Street and HS2 in the LEP area, up to £50 million of additional business rates New Street Stations through million of capital funding will over the life of the EZ. a transformation of the area’s be made available from the EZ connections, will enable a direct to bring forward infrastructure Detailed proposals for Birmingham link between the City Core and and commercial development. Airport/HS2 Interchange are the City Park to open up Eastside The focus for this investment will expected to be brought forward and Digbeth for SME growth. be around the proposed HS2 later in 2014/15. stations in the LEP area where • Transforming the quality of there are significant development The funding for these projects Fazeley Street and Park Street opportunities. This investment is expected to be available from as key connections to Eastside will be part of the local resources 2019/20 onwards, subject to will enable safe and accessible required to support the delivery securing the necessary business routes to be created linking of HS2 in line with the SEP growth rates income. Governance the university campuses with strategy. arrangements will be established opportunities for creative by the LEP to manage funding industries, ICT and digital media. Detailed proposals are already in for the Interchange, including the place for the Birmingham Curzon responsibilities for the individual City Centre Ring Road Station area, with a masterplan LA. • The A4540 Ring Road provides due to be agreed in 2014. These vital vehicular access to development sites within the EZ, linking the City Core with the main radial routes serving the City and the Strategic Road Network. The Ring Road currently experiences significant volumes of congestion during peak hours, with further pressure forecast to be placed on this infrastructure due to an increase in development trips generated by the EZ (40,000 new jobs) and network changes/highway reconfiguration relating to specific development sites.
To ensure direct access is maintained to the EZ sites via an efficient road network an initial package of essential junction capacity enhancements at key locations on the Ring Road are required. These locations comprise: - Bordesley Circus. - Ashted Circus. - Curzon Circle. - Haden Circus. - Holloway Circus. Paradise Circus
investment programme / birmingham city centre enterprise zone investment plan • Help businesses with the cost of Based upon a recognised 20% 20 LEP Investment Fund connection. successful conversion rate of LEP Investment Fund opportunities, it is proposed to set • Increase competition and up a £1.0 million FDI grant based Up to £20 million of capital funding innovation in the IT and telecoms fund linked directly to job creation will be made available to support services. and offering up to £1,000 per job the implementation of the SEP created. • Stimulate investment from media and its four delivery programmes. and knowledge based industries. This investment is part of the local resources that are aligned • Support SMEs to be able to take to support the delivery of the SEP advantage of the benefits of high vision and growth strategy. speed services. Skills Development Skills Development The SEP contains a number of projects for delivery between To enable businesses entering 2015/16 to 2020/21. These are the EZ sites to gain access to the estimated to be able to create Business right skills supporting business 19,200 jobs, 6,100 new dwellings, BusinessDevelopment Development growth £1.81 million will be 641,300 sq.m of commercial/ utilised to provide a flexible skills industrial space and infrastructure In order to support the growth of development package. This skills to support growth. existing businesses and to minimise package will support the LEP in the impact of displacement £3.18 delivering their objectives through As with the HS2 Growth Strategy million of funding will be directed linking opportunities in the EZ to a investment, funding from the EZ toward SME’s in the Digbeth, LEP wide audience. This investment is expected to be available from Jewellery Quarter and Birmingham covers the period 2015/16 to 2019/20 onwards. Therefore this Science Park Aston areas. This 2019/20. will be able to support projects covers the period 2014/15 to which require funding towards the 2017/18. There are three main components end of the SEP period. The LEP will designed to maximise impact: put appropriate arrangements in The package of support will include place to for the Governance of this the following: Employer focused recruitment fund. Extending the current employment • New business start-up fund access funding focused on offering subsidised financial brokerage, coordination and assistance of £2,500 to £7,500 to recruitment support to EZ Inward cover one off initial start up costs. Investors and expanding EZ Digital Infrastructure • Financial assistance consisting of companies. This would provide Digital Infrastructure 40% contribution of £10,000 to bespoke support maximising the £20,000 for existing businesses local impact of employment growth To facilitate growth in creative, to implement growth and from the EZ. digital media and ICT sectors in modernisation plans. the Digbeth, Jewellery Quarter Single pot for company training and Eastside areas £0.4 million of • Access to pre-recruitment Delivery of 100% funding towards funding will be invested. training, supporting recruitment skills training courses, language open days and pre-screening of and technical skills. Available for The successful bid for Super job ready candidates. all businesses within the EZ to bid Connected Cities Urban Broadband for. It will form part of the offer for funding secured £8.25 million of • Regulatory business advice inward locating companies and resources for capital works with an surgeries and peer monitoring expanding local businesses in additional £1.89 million from the scheme. target sectors. European Regional Development Fund (ERDF). However revenue Enhanced apprenticeships costs associated with the main Foreign direct investment digital infrastructure programme incentive scheme Providing a more developed are not supported by Urban The EZ presents an opportunity apprenticeship package to Broadband funding, with only a to attract and develop investors wrap around the core National certain amount of funding from and £1.0 million will be utilised to Apprenticeship City Hub. Schemes ERDF for revenue (£0.4 million). The provide incentives, which will allow providing wage subsidy and overall package will: successful delivery of potential mentoring/coaching support for EZ investors Business Birmingham are companies to assist in development working with. of apprenticeships.
birmingham city centre enterprise zone investment plan / investment programme A flexible skills development 3. UK intermediaries outreach to increase the awareness of package is proposed to enable - engage face to face with the EZ in the City and produce 21 businesses to access the right skills intermediaries such as foreign a marketing strategy to secure supporting indigenous expansion chambers and embassies in occupiers/investment as a result or attraction to the EZ sites. This London to increase our share of of upcoming major lease events. will focus on achieving a step inbound investment currently change in support to EZ locating heading to other regions and businesses and delivering LEP wide encourage delegations to visit objectives. and experience Birmingham first hand. EZ Delivery Team EZ Delivery Team 4. Lead generation campaigns Simplified Planning - a predominantly overseas In order to secure effective delivery Simplified Planning presence will then be based of projects £3.25 million will be around specific sector focused focused toward providing the To enable the Local Planning campaigns and supported by lead project management resource to Authority to streamline the generation contracts on an ‘as act as the client representative for planning process and fast track required’ basis and bolstered by EZ resources and drive forward decisions within the EZ £0.7 in-house desk research to identify projects. This will ensure the million of additional resources potential targets. necessary management of projects will be invested. This resource is in place to deliver them on time will enable the provision of 5. Collateral and targeted and to budget. An element of this nominated planning support, communications budget will also be used to support dedicated pre-application team - a number of actions will be taken revenue based feasibility studies and early engagement with to reach specific audiences to to either support initial project statutory consultees to facilitate promote and secure investment development or EZ wide research development on those sites in the EZ. Funding will be used activities. benefiting from the investment in site access, development and infrastructure.
Marketing Marketing
In order to promote the EZ sites to investors and businesses, £0.7 million will be utilised to create a bespoke marketing campaign throughout the Investment Plan period. The marketing campaign will focus on converting enquiries into investments through intelligent targeting that will include:
1. UK Trade and Investment ‘sales tool’ webinars - webinar sessions to educate the significant UKTI sales-force in our key international markets as to the strengths of Birmingham.
2. UKTI ‘fast track’ programme - working alongside UKTI’s ‘fast track’ programme to assist companies who have already made the decision to move into the UK and are looking for practical information and assistance. Eastside City Park
investment programme / birmingham city centre enterprise zone investment plan 22 Financial strategy
This section sets out the Financial Strategy for the EZ to support the proposed level of investment. It sets out projections of revenue and costs for the implementation of the Zone and its investments, as well as the financial principles which will govern its management.
Enterprise Zone income and rates uplift, has been accounted committed’, which reflects the Joint expenditure for in the update to the financial Venture arrangements that are in The detailed financial model model. place to bring the development has been updated for the EZ, forward. In total, EZ sites in these reflecting both expected business The income has been categorised categories currently have an rates income (revenue) based by its degree of certainty, linked anticipated annual income of £5.9 on modelling of development to the proposed phasing of the million by 2017/18 and £14.9 million and take-up, and expenditure development (including losses by 2022/23. associated with the delivery of the of business rates income as sites investment programme as set out get cleared), to ensure that the The remainder of the EZ sites in this document. proposed prudential borrowing is are considered ‘not committed’, sustainable. BCC is monitoring EZ meaning that development has EZ income income on this basis. not yet started and business rates income is not currently • Expected business rates income Buildings on EZ sites that have secure. These sites could deliver has been categorised by its been completed are deemed to an additional annual income of degree of certainty: generate ‘secured’ business rates £36.8 million by 2022/23. Whilst - Secured income; sites under construction these sites include longer term Business rates paid or legally or where schemes are guaranteed propositions, it also includes due. via legal agreement are considered schemes which are ready for ‘committed’ as business rates development (with planning - Committed uplift is reasonably secure. permission in place), although Construction on site or Another category has also been they require a level of guaranteed guaranteed via legal identified which specifically relates occupation before developers/ agreement therefore business to Paradise Circus, called ‘other investors will commit to building rates income reasonably secure. 60.00 - Other Committed Not committed Paradise Circus Phase 1 and 2 business rates income Other committed (Paradise Circus Phase 1 and 2) committed via Joint Venture 50.00 Committed agreement. Secured - Not Committed Development not yet started, 40.00 therefore business rates income not yet secure. 30.00 • Categories of EZ income allow £M for decisions on the investment
programme to be managed to 20.00 ensure expenditure is affordable.
The delivery of new business 10.00 accommodation on EZ sites is expected to result in a significant increase in business rates income 0 for the LEP to invest. The phasing 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 and delivery of new developments, Year and consequently the business Graph 2 Projected EZ income profile by category 2013/14 to 2022/23
birmingham city centre enterprise zone investment plan / financial strategy 23
the scheme. It is likely to take 600,000 approximately two years from Stay the start of construction to build Relocate developments and for BCC to start 500,000 collecting business rates.
The delivery of EZ sites which 400,000 are considered ‘not committed’ is dependent on the strength of the economy and the level feet Square 300,000 interest in the Birmingham market, particularly for offices which will provide accommodation for 200,000 the target sectors for the EZ. There are positive indicators that suggest demand for new 100,000 build or speculative led office accommodation will come forward over the next 5 to 10 years. 0 Factors include the predicted 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 shortfall in available Grade A office Year accommodation, significant lease Source: GVA (Spring 2014) expiry events which are likely to Graph 3 Birmingham City Centre lease expires (over 20,000sq.ft) further increase demand for office accommodation (see Graph 3) and the renewed programme of activity by developers on office schemes in the City Centre. The EZ is well placed to take advantage of this.
Until schemes are committed to, the categories of EZ income allow for decisions on the investment programme to be managed based on activity in the development market and certainty of delivery on EZ sites. The EZ income profile by category is set out in Graph 2 opposite, highlighting the importance of delivering ‘not committed’ sites to bring forward additional business rates uplift. Additional projects identified in the Investment Plan will be prioritised where they trigger business rates income, lever in additional public sector sources or where they lead directly to job creation. Birmingham Curzon HS2
financial strategy / birmingham city centre enterprise zone investment plan 60.00 Total NET forecast NNDR growth (including partner income) Programme will be managed by 24 the EZ Executive Board, who will Infrastructure finance costs determine priorities for funding for 50.00 Revenue projects/Accountable Body/establishment costs projects when resources allow. Contingency budget (@15% forecast NNDR) This approach allows for a like Annual surplus/(deficit) 40.00 for like analysis of affordability Cumulative surplus/(deficit) compared to expected income. In this way, the updated Investment 30.00 Plan provides for more informed strategic decision making in support of the financial strategy 20.00 and aides the risk management process. £M
10.00 The Approved and Additional Programmes, totalling £275 million, are considered affordable based on the expected income levels 0 that the EZ will generate (Graph 4). Expenditure will be managed to enable projects to come forward 10.00 as developments start on site to provide the security over this income. 20.00
Sensitivity analysis 30.00 A sensitivity analysis has been 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 undertaken on the annual revenue Year cost including forecast borrowing Graph 4 Investment Plan Approved and Additional Programme to meet the requirements of the and EZ income comparison 2013/14 to 2022/23 investment programme compared to the categories of business rate forecast growth over the next 10 years. It can be seen in Graph EZ expenditure Resources for the Approved 5 opposite that the annual cost Programme of £128 million are outstrips the business rates growth • Identification of an Approved based on the original Investment Programme and an Additional in 2016/17 and 2017/18, however Plan which was agreed with the it is planned that this pressure Programme to reflect status of LEP and BCC. These projects are projects. will be met by annual surpluses considered affordable over the life generated over the first three time of the EZ based on current • The Approved Programme of years. It is important to note that forecast business rates income. £128 million is based on the the affordability of the Additional original Investment Plan. Programme is predicated on The Additional Programme, with an certainty and security of currently • Decisions on investment in the investment value of £147 million, is ‘uncommitted’ business rates Additional Programme (£147 identified to support the delivery growth. million) will be made when of the EZ over the 10 year time business rates income resources frame of the Investment Plan and allow. to support other key LEP priorities, Financial principles such as the HS2 Growth Strategy High level risks associated with Capital investment and revenue and Strategic Economic Plan. the management of EZ resources projects identified in the have been identified, and investment programme are Decisions on the individual modelled out through sensitivity analysed and financially monitored elements of the Additional testing. The assumed level of by their current status, in a similar Programme will be made when the business rates income for the EZ way to business rate income. This cost implications can be contained is highly sensitive to anticipated has led to the identification of within ‘secured’, ‘committed’ and levels of development activity. an Approved Programme and an ‘other committed’ business rate Similarly, increased project costs Additional Programme. revenue resources. The Additional or borrowing costs would be
birmingham city centre enterprise zone investment plan / financial strategy detrimental to the achievement To ensure that the financial business rate income levels start of proposed investment. As such, management of the Zone is robust, to materialise in line with their 25 robust principles for financial and and that projected expenditure forecasts, then consideration project management are required. including borrowing and will be given to releasing the establishment costs, is affordable, surplus reserve generated from The capital investment set out a series of financial principles have the application of this approach in the Investment Plan will be been developed: to support further LEP investment funded though Local Authority (LA) proposals. Prudential Borrowing. The financial 1. Income Safety Margins implications of this borrowing, as For reasons of prudence, 2. Borrowing repaid within life of well as the establishment costs particularly during the early years the EZ of administrating the EZ, and of EZ business rate uplift, only a The business rates income stream other revenue based projects will proportion of net business rate will cease after 25 years (i.e. by be funded through the revenue income will be taken into account 31st March 2038). All associated income stream generated through in determining expenditure borrowing must therefore be additional business rates. commitments, including borrowing repaid within this term in order and operating costs. The intention to ensure that the borrowing Within the EZ, where capital is to provide a safety margin due to is prudent, affordable and expenditure is to be financed, the associated risks of business rate sustainable. Consequently capital BCC as the Accountable Body, income levels not matching their projects commencing in Year 2 of will facilitate the borrowing. BCC profiled income levels. the Programme will be borrowed will calculate the borrowing costs using an annuity which allows using its existing arrangements for In order to ensure that there are the capital sum borrowed to be recharging costs (i.e. interest and sufficient reserves to meet short repaid over a 24 year term, whilst the statutory requirements for debt term falls in income or increased projects commencing in Year 3 will repayment). These borrowing costs costs, a sum equivalent to 15% effectively be borrowed and repaid will be funded from EZ revenue of the annual EZ income will be over a 23 year term, etc. resources generated from the set aside on a cumulative basis additional business rates. to meet uncertainties. Once EZ This means that capital intensive investments which are approved and borrowed for over a longer time frame will have a lesser financial impact in terms of affordability against the annual EZ Programme than if they were undertaken over a shorter period (i.e. the longer the borrowing term the smaller the annuity charge to the revenue account). On-going monitoring of the EZ programme resources and the 50.00 financial implications resulting Not committed from approved projects in the Other committed (Paradise Circus Phase 1 & 2) investment programme will provide 40.00 Committed a valuable tool against which an assessment can be made as to the Secured level of future capital investments Annual revenue cost - Approved and 30.00 Additional Investment Programme that the EZ can support in later Investment Plan periods. All £M EZ investment decisions are
20.00 considered and only endorsed by the Accountable Body subject to their being affordable.
10.00
0 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 Year
Graph 5 Sensitivity analysis of EZ income and expenditure 2013/14 to 2022/23
financial strategy / birmingham city centre enterprise zone investment plan 3. Utilising Assets under the City Council and other local 26 Construction Policy authority partners will ultimately In accordance with CIPFA be responsible for their own guidelines LA can roll up projects, associated cost control interest charges for assets under and other financial risks. In the construction. For infrastructure and event that project costs exceed other capital projects this offers those approved by the LEP then the advantage to smooth out cost any additional costs incurred or to and income cashflows so that be incurred above those supported income from business rates arises through EZ income will become in the same financial period as the the financial responsibility of the revenue costs of the project which delivery partner and not the EZ BCC has to account for. or BCC in its Accountable Body role. This is particularly relevant for 4. Site-by-site business cases as the LEP Investment Fund and HS2 well as LEP-wide business cases Growth Strategy investments which could fund projects outside of the Proposed expenditure BCC area. commitments for individual developments will be financially 8. Management and monitoring of appraised against the expected resources business rates impact arising from that development through The delivery of the Approved individual business cases. and Additional Programmes will depend on having robust processes 5. Financial commitments aligned in place to manage and monitor to development commitments income and expenditure for the EZ. This will be undertaken as For EZ developments, and part of the regular reporting to wherever feasible, financial the LEP through the Governance commitments will only be made arrangements to provide ongoing following legal agreement with updates to the financial model the developer/landowner once and to ensure risks to delivery are development projects have been highlighted. committed to. This will provide assurance that the business rates Whilst the LEP approves individual income stream is reasonably capital investment and revenue secure. proposals for EZ support, the Accountable Body will ultimately 6. Prudential Borrowing endorse these projects going In borrowing for LEP EZ funded forward subject to the viability projects, BCC is subject to legal of the investment proposal in constraints and statutory guidance terms of overall affordability. This in relation to the borrowing. This assessment will be based on the includes compliance with the future availability of secured, but Authority’s accounting and debt uncommitted, EZ business rate repayment policies. BCC will income resources. Consequently consider the financial implications it may be necessary for the City of any LEP EZ proposals, as Council, in its Accountable Body part of its overall budget (for role; example, in setting its Prudential Borrowing indicators and limits) a) to seek a re-profiling of proposed and in complying with the CIPFA expenditure levels so that accord Prudential Code. with available resources, or;
7. Income provided to support b) to endorse projects for EZ wider LEP Investments funding only when there Whilst the City Council will support are sufficient secured and and fund approved EZ investment appropriate levels of business decisions made by the LEP, both rate income in place.
birmingham city centre enterprise zone investment plan / financial strategy 27
Metro proposals and HS2 Station at New Canal Street
financial strategy / birmingham city centre enterprise zone investment plan 28 Economic impact of the EZ investment programme to 2022/23
As a direct result of the delivery of the overall investment programme, development activity across the EZ will generate a range of significant economic impacts.
Key benefits will include: Gross employment In terms of the net additional The development of the EZ will permanent employment impact, it • Creation of short-term and generate employment both is estimated that by 2022/23 some permanent employment. through the construction of new 10,810 net additional jobs will have infrastructure and premises, and in been created at the Birmingham • Additional economic activity accommodating business activity level and around 12,620 at the LEP resulting from supply linkage and within Birmingham’s City Centre. area level. income multiplier effects. Permanent employment Construction employment • Broader impacts of the projects in New employment floorspace Significant employment will be relation to generating additional delivered through investment generated within the construction economic activity and other across the EZ will create significant and associated sectors through benefits. employment opportunities. In total, the development of key schemes it is estimated that businesses across the EZ. The overall out- • A range of wider impacts such as and other organisations located in turn cost of development activity image and cultural benefits. the EZ will accommodate around associated with the EZ sites has 21,060 gross jobs by 2022/23 rising been estimated at £1,040 million By 2022/23 there will have to 40,181 by 2037/38. to 2022/23 and £2,205 million been significant progress made to achieving the overall EZ programme outputs, as summarised in Table 6 below:
Outputs 2022/2023 Total EZ Programme (2037/2038)
Number of FTE jobs created 21,833 40,818
Permanent employment (FTE) - Office 18,899 35,786
Permanent employment (FTE) - Other 2,161 5,032
Construction employment (FTE) 773
Area of new business/commercial floorspace (sq.m) 618,065 1,384,598
Floorspace created (sq.m) - Office 314,989 911,417
Floorspace created (sq.m) - Other 303,076 473,181
Gross Value Added (£m) - Birmingham 1,011.5 1,944.8
Gross Value Added (£m) - LEP 929.3 1,844.4
Uplift in Business Rates (per annum) (£m) 51.768 134,670.299
Private Sector Capital Investment (£m) 1,039.4 2,205
EZ Investment Programme Capital Expenditure (£m) 261.1
Table 6 Birmingham EZ outputs for initial Investment Programme
birmingham city centre enterprise zone investment plan / economic impact 29
to 2037/38. Alongside these equivalent to NVQ Level 4 or will also complement wider development projects, a range above. Only 6% will not require any planned investment, particularly of other investments associated NVQ equivalent qualifications. A with regard to implementing with the implementation of the further 30% will require NVQ Level proposals for HS2 between Investment Plan (e.g. the delivery of 2 or 3 and the remaining 20% will London and Birmingham. new infrastructure) are expected to require skills levels equivalent to result in further capital expenditure NVQ Level 1 or other qualifications. • Social - Through job creation both within and outside the EZ. This reflects the relatively high impacts, redevelopment proportion of higher order activity has the potential to Overall, this level of expenditure occupations. help to address pockets of has the potential to generate high employment deprivation 773 full time equivalent jobs in within the LEP area. Investment the construction sector over the Net additional gross value added will be complemented by Investment Plan period. There will be a positive impact appropriate measures to ensure on net additional GVA generated that training is made available Profile of permanent employment as a result of the permanent jobs for local residents. In addition, By 2022/23, the majority of expected to be created through local communities will also employment created through the development of the EZ sites. benefit from the creation of new the development of the EZ sites infrastructure, alongside the is expected to be within key Overall, it is estimated that by development of new educational office based sectors particularly 2022/23 the development of the facilities within the City Centre. the business and professional EZ sites will be generating around New leisure and retail provision services sector (32%) and financial £1,010 million of GVA per annum will extend the range of services and insurance services (20%). at the Birmingham level and £930 available for residents of the Significant employment growth is million at the LEP area level. LEP within a highly accessible also expected within administrative location. Investment will enhance and supporting services (30%). the overall quality of the City Employment opportunities will Wider economic impacts Centre, creating new public realm also be created in complementary The redevelopment of the environments for use by local sectors, including retail, arts and Investment Area will generate a communities. entertainment. range of wider benefits. These include the following: • Environmental - Investment will Based upon benchmark analysis result in the redevelopment of of the sub-regional labour market, • Economic - New investment will vacant, derelict and under-utilised of the 21,060 jobs created by result in wider economic benefits sites, complementing a range of 2022/23 it is anticipated that some across the Greater Birmingham other interventions to uplift the 9,700 (46%) will be managerial, and Solihull LEP area. Through quality of the wider environment. professional or associate bringing development professional, with a further 19% opportunities to the market, (3,825) being administrative or stimulating demand and enabling secretarial. Significant employment the implementation of new opportunities will also arise in infrastructure and an improved sales and services sectors and in environment, redevelopment elementary occupational sectors. has the potential to significantly enhance perceptions of the Of the total number of jobs created City Centre and stimulate by 2022/23, it is estimated that further investor and occupier around 40% will require skills levels interest. New development
economic impact / birmingham city centre enterprise zone investment plan 30 Governance and project delivery
The governance structure for the EZ was set out in the Implementation Plan agreed at the LEP Board in November 2011. This section describes how Birmingham City Council (BCC) works with the LEP to best use EZ resources.
Accountable Body Governance structure The Governance arrangements BCC will act as the Accountable To deliver co-ordinated governance for the HS2 Growth Strategy Body for the EZ on behalf of the over the EZ Investment Plan period, (the Interchange site) and LEP LEP. The cost associated with this and in future years, a series of key Investment Fund will reflect the will be £210,000 per annum. roles have been identified: geography where this funding will be used. The LEP will ensure that In its role as the Accountable Body • EZ Executive Board - chaired appropriate arrangements are put BCC undertakes the following: by Chris Webster, LEP Board in place prior to 2019/20 when this member with responsibility for funding is expected to become • Project manages the the EZ. The EZ Executive Board available. implementation of the EZ is the key decision making body site business cases, financial for the use of EZ resources and modelling and approvals process reports directly to the LEP Board EZ project governance to include third party liaison and on the basis of twice yearly Investment Plan projects will follow individual development initiation. update reports. BCC governance processes, being managed and monitored in the • Administers both the collection • EZ Directors Board - chaired by first instance through the Portfolio of business rates discounts to Waheed Nazir, Birmingham City Board. Decisions on the use of EZ businesses and the collection of Council’s Director for Planning resources require approval through business rates above the baseline and Regeneration. This Board the EZ Governance arrangements. and maintain these in a separate monitors project performance, account for the benefit of the EZ. revenue collection and provides Once approved, projects will be overall programme management. subject to a funding agreement • Provides the treasury It reviews business cases between BCC as the Accountable management function for ring- and forwards these to the EZ Body and the beneficiary of EZ fenced EZ funds. Executive Board for decisions. finance. Monitoring reports will The Chair of the Board works in be regularly presented to the LEP • Prepares and updates the capital close co-operation with the EZ Board. Any support to individual and revenue investment strategy Executive Chair. developers/landowners/businesses for the EZ. will need to comply with State • EZ Portfolio Board - is made up Aid requirements and necessary • Prepares necessary reports on the of the Programme/Project Leads arrangements will be put in place progress within the EZ. for each of the EZ Programmes. to manage this. It assesses projects and the • Prepares and oversees legal management of resources; Prioritisation of EZ projects agreements to third parties reporting key issues and The EZ Executive Board has in respect of grants and other opportunities to the EZ Executive delegated powers from the LEP funding agreements to safeguard Board. Board to approve EZ projects. BCC and the LEP. It undertakes this function in • Each of these Boards meet on a conjunction with the Accountable • Appraises LEP projects to be monthly basis. Body, who provides project funded from EZ income in its role appraisal advice. In order to guide as the Accountable Body.
birmingham city centre enterprise zone investment plan / governance and project delivery 31
the priority order for the selection of EZ projects, the following criteria are used:
• EZ Investment Plan priority will be for projects which: - Trigger business rates income within the EZ (measured in net present value). - Lever additional public or direct private sector resources (those projects levering the greatest levels of none EZ resources being awarded the highest priority). - Lead directly to job creation within the EZ. The EZ Executive Board will operate these priority assessment criteria on a case by case basis. Affordability assessments will be undertaken by the Accountable Body.
Through this Investment Plan, the City Council will support the LEP deliver its Enterprise Zone and wider growth proposals as set out in the SEP. The success of the Enterprise Zone will help deliver new development and infrastructure to achieve our aspirations for the City Centre.
Waheed Nazir Director of Planning and Regeneration Birmingham City Council
governance and project delivery / birmingham city centre enterprise zone investment plan 32 Appendix Risk register
Risk Probability Impact Mitigation Lead responsibility
1 Business rates in the Enterprise Zones Low. Low. Managed through Financial EZ Executive comprise businesses eligible for rate Reporting System and Board. relief, e.g. charities. This will impact on Contingency allowance. the total collectable rates.
2 Business rate collection falls below Low. Moderate. Resources are devoted BCC - forecasted 98%. to maximising payment. Business Managed through Financial Rates Team. Reporting System and 15% Contingency Allowance.
3 Development fails to materialise in Moderate/ High. Investment Plan has EZ Executive accordance with projections which are High. categorised the business rates Board. vulnerable to wider fluctuations in the growth and a more rigorous economy. management approach has been implemented to align investment decisions with revenue projections. Investment programme financial profile reflects security of revenue income. 15% safety margin also applied to annual EZ income.
4 Modelled income levels are not Low. High. Investment Plan has identified EZ Executive sufficient to support LEP projects the likely date when resources Board. outside of the EZ. could be available for these projects. The availability of this funding will be subject to appropriate Governance arrangements and Business Case requirements.
5 Key EZ project costs increase due to Moderate. High. Robust assessment of EZ Executive unforeseen rises in cost or delays. business cases will ensure Board. cost estimates are robust. Budgets managed for wider programme to ensure projects are affordable within available resources.
birmingham city centre enterprise zone investment plan / risk register 33
Risk Probability Impact Mitigation Lead responsibility
6 Short term treasury rates increase Moderate. High. Investment Plan modelled BCC - beyond those forecast by Treasury up to on treasury projection up Financial 2018. to 2016/17. Investment Services. programme revised to reflect financial commitments and risks.
7 Interest from businesses in the EZ does Low. High. Implementation of marketing/ EZ Executive not materialise. promotions in line with Board. resources identified in Investment Plan.
8 Impact of rating revaluation in 2017 Moderate. Moderate. Some reduction in rateable BCC - reduces income as there is likely to values is possible during 2017 Financial be downward pressure on rateable revaluation exercise impact Services. values given the broader economy and mitigated by inflation based property market. rises in rating multiplier.
risk register / birmingham city centre enterprise zone investment plan