MANCHESTER CITY COUNCIL REPORT FOR RESOLUTION
REPORT TO: THE EXECUTIVE
DATE: 18 JANUARY 2006
SUBJECT: THE BBC MANCHESTER INITIATIVE
REPORT OF: THE CHIEF EXECUTIVE
1. Purpose of Report
To update the Executive on proposals by the BBC to create the UK’s second largest network broadcasting and production centre in Manchester; inform the Executive of the Councils’ role in facilitating the relocation to Manchester; and to seek the Executive’s approval for the actions required to realise the full economic potential of the BBC Manchester Initiative.
2. Recommendations
2.1 The Executive is recommended to: i. Note and welcome the progress that has been made in taking forward the BBC Manchester Initiative; ii. Note the key findings of the economic impact study commissioned by the City Council and the NWDA of the BBC Manchester Initiative, which demonstrates the transformational impact of the BBC’s relocation decision (attached at Appendix 1); iii. Determine that the proposals for the Council’s support as set out in the report for the BBC’s relocation within the City Centre and the development of the Media Enterprise Zone, will promote and improve the City’s economic and social well being. iv. Authorise the Chief Executive to continue to work with the BBC and the North West Development Agency (NWDA), and to lead a core group of key public partners and other stakeholders to develop further the concept of a Media Enterprise Zone, with the intention of delivering the BBC’s relocation within the city centre, thereby generating additional benefits through the participation and relocation of other media and creative related businesses; v. In light of the determination at iv. agree, in principle, funding of up to £20M as part of the Council’s Capital Programme from the Council’s Capital Fund to support the BBC’s relocation to Manchester, subject to £30M also being committed by the NWDA, and to a full business
- 1 - case and details of the proposed contractual arrangements between the parties being presented to the Executive for approval; and vi. Request a further report be brought back to the Executive, in due course, on the outcome of the BBC Manchester Initiative, with a detailed strategy and implementation plan for its delivery.
3. Financial Consequences for the Revenue Budget
The City Council, together with a range of other public agencies are continuing to assist the BBC to define the scope, content and public investment requirements of their proposal, based on a range of value added measures that will bring wider economic benefit to the City and the region. These measures have and will continue to require funding from key public agencies, notably the Council and the NWDA.
There will be a requirement for the Council to expend further resources over the coming months to support the business and development planning process, but this will be funded through existing budgets.
Any relocation of a significant facility to Manchester should increase the Council’s non-domestic rates base with the possibility of a share of this coming to the City Council in future years through the Local Authority Business Growth Incentive.
4. Financial Consequences for the Capital Budget
The City Council and the NWDA have given a joint commitment to support the BBC’s relocation strategy up to a total of £50M. The commitment has been given on the basis of the quantum and quality of the economic impact and wider benefits generated by the BBC Manchester Initiative, though the final sum will be dependent on a robust business case. However, the detailed proposals for funding arising out of the BBC Manchester Initiative will be brought back to the Executive, in due course. The proposed £20M City Council investment can be met from utilising the anticipated balances on the Capital Fund.
5. Contact Officers
Howard Bernstein Chief Executive 234 3006 Email: [email protected]
Richard Paver City Treasurer 234 3564 Email: [email protected]
Pat Bartoli Chief Executives Department 234 3329 Email: [email protected]
6. Background Documents
Report to the Executive – July 2004
- 2 - Report to the Executive – December 2004 Report to the Executive – March 2005 Cambridge Policy Consultants Report The Strategic Case Making and Economic Impact of the BBC North Plan – November 2005 All held on file in Room 307.
7. Wards Affected
All
8. Implications for
Anti-Poverty Equal Opportunities Environment Economic Yes Yes Yes Yes
- 3 - 1. Introduction
1.1 The Executive has received reports informing them of the outline proposals by the BBC to devolve a significant amount of programme commissioning spend and jobs out of London. These reports also identified the key role of the Council in working closely with the BBC to deliver their objectives.
1.2 This report seeks to update the Executive on progress with the BBC’s objectives, the central role of the Council (and the NWDA) in helping the BBC to progress the Initiative, and the timetable for the BBC to make a formal decision on their proposed move.
2. Background
2.1 In December 2004, the BBC formally announced plans to create the UK's second largest network broadcasting and production centre in Manchester. This announcement was the culmination of extensive discussions involving the Leader of the Council and the Chief Executive with the current and previous Director General of the BBC. The BBC plan to relocate a significant proportion of its London base to Manchester, including CBBC, BBC Sport, New Media, Research and Development, and Radio Five Live. The BBC will also transfer around £250M of commissioning spend and up to 1,600 BBC jobs from London. A further 250 facility roles may be created for in-house services (eg. post-production facilities) and 150 ancillary roles (in contract services such as cleaning and security).
2.2 The BBC’s announcement fully complemented the objectives identified by the Council and the NWDA to create in Manchester a sustainable media cluster of national and international significance, which, in turn, will help to transform the market position and prospects of the media sector in Manchester, the North West and the North of England as a whole.
2.3 Working with the BBC and the NWDA, the Council developed a series of proposals to deliver a range of additional benefits to augment the BBC’s plans to enable Manchester and the wider region to build on its current position as the UK’s leading regional media centre. Central to these was a proposal to develop a Media Enterprise Zone (MEZ), which would be the location for the BBC’s campus, together with a range of media and creative related businesses and enterprises. The MEZ would support both the BBC in the development of its talent base and enable the media and creative sector to continue to grow and flourish in the City and the region. This critical mass of activity would capture important synergies through the participation of the full range of media enterprises, including the sharing of technical facilities. The intention would, of course, be to incorporate the requirements of ITV/Granada either through their physical co-location on the site of the MEZ, or through their sharing of technical facilities. (Section 4 below provides more detail on the MEZ proposal).
- 4 - 2.4 Independent consultants (Cambridge Policy Consultants) were also commissioned by the Council and the NWDA in Summer 2005 to analyse the scale of economic impact that would be generated by the BBC’s relocation proposals, and as part of the MEZ. This work has recently been completed and their findings indicate that the totality of the BBC’s proposals has the potential to generate more than £1.5bn in Gross Value Added over the next decade, and a total of 4,400 jobs, making the BBC Manchester Initiative potentially the single largest inward investment proposal ever to take place in the City. The Executive Summary of this Study is attached at Appendix 1.
2.5 In previous reports it was suggested that significant public funding would be required for the creation of the MEZ, if all the public sector’s objectives were to be achieved.
3. Progress with the BBC Manchester Initiative
3.1 In August 2005, the BBC decided to initiate a new process for determining a site for its relocation, in order to demonstrate transparency in its decision-making. The BBC issued an open invitation inviting landowners in the Manchester area to respond to a Request for Information (RfI) regarding the suitability of sites in their ownership for a purpose-built BBC campus and the development of the MEZ. This process led to four sites being shortlisted by the BBC - two in Manchester - namely: Quay Street (the existing Manchester base for ITV/Granada); and the Central Spine in the Southern Gateway area; and two in Salford, Pier 9 at Salford Quays; and Greengate in Central Salford.
3.2 The BBC has decided that the existing BBC campus site on Oxford Road is not a valid option, as the site could not easily accommodate additional facilities and services above that are required by the BBC. In addition, the BBC considered that the costs of decanting and site assembly would make the Oxford Road site prohibitively expensive.
3.3 As the Chief Executive reported to the Executive in December, submissions have been made to the BBC on the Manchester sites, as requested by the BBC on the basis of a MEZ proposition and alternatively, a BBC stand-alone option, which would attract different levels of public funding subsidy.
3.4 The submissions included information around the capacity of the Manchester sites to physically accommodate the BBC’s campus, which would include existing Manchester-based BBC staff, the creation of the MEZ; the track record of the landowners and their partners; the provision of technical facilities; support provision for relocating staff; and the strategic fit with local, sub-regional and regional strategies and plans. Of critical importance to the BBC is the amount of public funding available to support their relocation plans. This has and will continue to be a major feature of intensive negotiations with the BBC and the NWDA over the next few months.
- 5 - 3.5 The submissions on the Manchester sites have been made to the BBC in the Council’s name. The Central Spine submission is supported by the key landowners Ask and Henderson, and includes the Council as a landowner. The landowning partnership also has a commercial partner in Morgan Stanley, on the basis of their formidable investment achievement and covenant strength. ITV/Granada endorsed the submission for Quay Street. The Council fully supported the vision proposed for the development of the MEZ at Quay Street, although the inclusion of a commercial partner was considered by all the parties to be essential in order to strengthen the Quay Street proposals. ITV are now in the process of selecting a development partner.
3.6 The BBC, working with the NWDA, has begun a process of evaluating and testing the shortlisted options. The outcome of this is anticipated by mid-January when the BBC is expected to shortlist two sites. The outcome of the shortlisting process will be reported verbally to the Executive. Further detailed submissions on the shortlisted sites will be made over the following weeks. BBC Executives will report the outcome of proceedings to their Governors in March/April, and a formal announcement on the selected site is expected in May/June 2006.
4. Media Enterprise Zone
4.1 The Chief Executive has always made it clear in discussions with the BBC that to realise the full economic potential of the BBC’s proposals, and to secure a maximum funding commitment from the public sector, including the Council, it would be necessary to:
i. Secure the development of a MEZ, by utilising the enhanced operational presence of the BBC to anchor a new spatial focus for media and creative related businesses, including new technology providers and, potentially, a range of linked facilities and services provided by local partners. Additional facilities could include the BBC Children and Family Learning Centre, the BBC Media Institute and a range of support services and social facilities; and
ii. Locate the MEZ within the City Centre to maximise accessibility, which is crucial for skill development, clustering and capturing maximum community benefit.
4.2 The above requirements are fully justified by the economic impact study, as well as other work that has been undertaken as part of the provisional submissions. These analyses confirm that the greatest possible complementarity between regional and sub-regional frameworks and local economic and planning objectives can only be achieved by locating the MEZ within the City Centre.
4.3 Work has continued to develop the scope of the MEZ proposals and the range of added value initiatives that will bring wider benefits to
- 6 - the City, the region and the North of England as a whole, and which in summary include:
* working with the City’s Universities and Colleges and Manchester Enterprises to establish a post-16 training facility to meet the skill demands of the BBC and the wider sector;
* developing links with industry-led agencies around creative industries and new technologies and the future development of the independent sector;
* developing new links with the City’s Universities and other institutions on research and development activities;
* creating public access opportunities to integrate the BBC’s operations with the wider area;
* providing dedicated support to the BBC to manage and facilitate the relocation of London-based staff to Manchester;
* engaging technology partners to explore new media technologies and innovations to underpin the growth and development of the MEZ; and
* developing an understanding of the range and specification for modern technical facilities which are essential to facilitate the active participation of the full range of media-related organisations, including ITV/Granada who have been consistent and strong proponents of the MEZ concept.
4.4 The BBC have expressed support in principle for this total approach and recognise that the delivery of the added value components will require a mix of public funding from a variety of sources, including the NWDA.
4.5 The current intention is that the MEZ will be managed by an independent Trust charged with responsibility for overseeing and managing the facilities of the MEZ in accordance with objectives agreed with the public sector; securing the widest possible participation of media and creative enterprises; securing full and proper access to technical facilities and publicly accessible areas; attracting new enterprises and nurturing new talent; and marketing and regulating the use of shared facilities. The Trust will have the necessary capacity to work with a development partner and with the external facility management and technical providers to ensure the MEZ achieves its full potential. This proposed outline governance structure commands support amongst key partners including the NWDA, the BBC and ITV/Granada.
- 7 - 5. Public Funding
5.1 The Chief Executive, following consultation with the Leader of the Council, has agreed, in principle, with the NWDA that only the development of the MEZ in the City Centre would justify a public funding commitment of £50M. Of this total, £20M is intended to be provided by the Council. All the public funding would of course be subject to the presentation of a full business case for approval by the Council, the NWDA, and in the case of the latter’s contribution, by HM Treasury. The Chief Executive has also made it clear that the Council funding would also be conditional upon NWDA funding of at least £30M being confirmed.
5.2 This funding commitment, subject to the endorsement of the Executive and the Council, was communicated in the provisional bids for both Quay Street and the Southern Gateway, which were presented to the BBC and the NWDA last month.
5.3 In both submissions the likelihood was expressed that Council funding would be related to the acquisition of land required for the project. The freehold of the land would remain with the Council, an important objective given the scale of the proposed investment, and the opportunities this will provide, alongside contractual arrangements to vouchsafe key outcomes including the economic rationale for the investment. The other funding to be provided by the NWDA or other public partners would be deployed also to support the BBC’s relocation to the MEZ, including the provision of technical facilities, relocation support, recruitment and skill development measures, contributions to development costs etc.
5.4 The next stage of the process will represent a crucial period of the Initiative, where it will be necessary to crystallise a number of fundamental issues, including the following:
* The precise details on the BBC functions to be relocated, staffing and job requirements, and commissioning arrangements, so that these become obligations to be placed upon the BBC, and directly related to the quantum of local funding support;
* The detailed commercial arrangements, including the value associated with the acquisition of land required for the MEZ. Both the Council and the NWDA will need to be satisfied that such terms are reasonable, and DTZ Debenham Tie Leung have been retained to advise both public parties on these issues. One of the key requirements will be to ensure that landowners do not obtain a disproportionate benefit as a result of the public sector’s investment;
* The detailed arrangements in relation to governance of the MEZ, and the contractual relationships between the Council, other public funders, and the BBC so that the objectives of the public
- 8 - sector, and the rationale for its significant investment, are both protected and promoted;
* The ownership and management arrangements of the technical facilities, which need to be not only robust but sufficiently sensitive to meet the needs of the BBC and other broadcasters and enterprises whose access to these facilities is a pre-requisite to success;
* As previously indicated, ITV/Granada have been powerful supporters of the MEZ, and it will be a key objective to ensure, irrespective of whether the BBC decides to shortlist the Quay Street site, that ITV/Granada has the opportunity to actively participate in the MEZ on the Central Spine, Southern Gateway site. While physical co-location of all major broadcasters on the MEZ is desirable, it is not strictly necessary. What is fundamental is participation through sharing technical facilities. ITV/Granada’s importance to media-related activities within the City-region cannot be overstated and whatever the outcome of the BBC’s decision-making over the coming weeks, which neither the Council nor the NWDA can control, it will be a major priority to work closely with ITV/Granada to ensure that its active participation within the MEZ is promoted and delivered;
* Robust arrangements are defined and agreed to ensure that a Project Implementation and Management Plan is brought forward, which would promote regular monitoring and review; and
* All of these critical work streams must be completed in time for incorporation into the full business case, which will need to be presented to the Council and the NWDA, and prior to any funding being confirmed. This is expected to be largely complete by late Summer 2006.
5.5 The BBC recognise these requirements and they, in turn, have emphasised the importance of the Charter Renewal process, which is now underway with Government to bring their relocation plans to a successful conclusion. Discussions between the BBC and Government are not expected to be concluded until the Spring, and the Leader and the Chair of the NWDA are in regular touch with Ministers so they can fully understand the economic importance of the project, not only to the BBC but also the City/ Region.
5.6 Under Section 2 of the Local Government Act 2000, the Council has the power to do anything which it considers likely to promote or improve the social, economic or environmental well being of its area. In exercising this power the Council must have regard to its Community Strategy.
5.7 The Council’s Community Strategy identifies building on the City’s cultural and creative strengths including the presence of the BBC and Granada as key priorities. Subject to review of the full
- 9 - business case and of the details of the proposed arrangements between the parties at the appropriate time, the projected social and economic impacts of the BBC’s relocation to Manchester and the development of the MEZ provide a basis for the Council to exercise its powers under Section 2 alongside other powers, to support the BBC’s relocation, to contribute to the development of the Media Enterprise Zone and to provide funding as set out in this report.
6. Conclusion
6.1 As the site selection process continues, the Council has a key role to play in ensuring that the right outcome is achieved for the City and the region as a whole. The challenge now is to ensure that a location is shortlisted that both meets the BBC’s requirements in full and maximises economic benefit for Manchester and the North West, and then to translate the BBC’s conceptual plan for its campus into a Media Enterprise Zone, with a range of other key players and a robust programme of business development and support services. This will need to involve a range of stakeholders and partners, as well as public funding agencies over the coming months.
6.2 The NWDA’s role in this respect will be particularly significant. The relocation of the BBC’s facilities and activities to Manchester, which is recognised as a transformational action in the new Regional Economic Strategy, will help ensure that the BBC Manchester Initiative remains an investment focus for all key public sector partners over the coming years.
6.3 The opportunity has been created to generate significant added value through the development of a MEZ, which will incorporate a new and expanded BBC campus with the capacity to develop modern technical facilities to be shared with the full range of media broadcasters and suppliers. The delivery of a MEZ within the City Centre will require significant public funding, and a £20M investment by the Council, subject to the production of a full business case, is considered justified having regard to the economic and social benefits which will be generated, and which have the capacity to transform media and related activities within the City and the region as a whole.
6.4 The intention is that through joint working, a detailed business plan is finalised by late Summer 2006, whereupon a further report will be submitted to the Executive.
6.5 Detailed recommendations appear at the front of this report.
- 10 -