PROJECT APPRAISAL FORM
STAGE 2: INVESTMENT DECISION
Title: Business Rate Relief
Date: July 2012
PART 1: NON CONFIDENTIAL FACTS AND INFORMATION
1. Purpose of the paper
1.1 The purpose of this paper is to seek Stage 2 approval from Investment and Programme
Board for £1,114,335 revenue grant funding to London Borough of Croydon for a
Business Rate Relief incentive for Croydon’s main office district, Croydon New Town
(CNT). The funding draws down part of the £5m revenue grant announced by the
Mayor in November 2012 for an integrated Business Support Package (BSP) to support
enterprise and growth across Croydon. The Stage 1 approval was given by the
Regeneration and Investment Group on 6th June 2012.
1.2 As part of the BSP, the Council are promoting an Innovation Centre to support the
establishment and growth of new sectors in the borough. This has also achieved Stage 1
approval status and Stage 2 approval will be sought in September.
1.3 Following detailed discussions with the GLA following a Stage 1 review, LB Croydon
have proposed to drop the Office Stock Improvement project and direct the remaining
revenue allocation to support economic regeneration and growth in the West Croydon
1.4 The BSP is an integral part of the overall £23m regeneration fund committed by the
London Mayor to enhance Croydon’s economic and social recovery after the events of the
summer of 2011. These targeted interventions will complement the public realm works
being carried out under the Connected Croydon projects in the town centre which are
part funded by the Mayor’s Regeneration Fund.
2.1 It is recommended that Investment and Programme Board:
Approve an investment of £1,114,335 revenue funding for a Business Rate Relief
Programme targeted at larger SMEs
o GLA approval of an integrated marketing and communications strategy
targeted at potential business beneficiaries to be produced by LB Croydon
(LBC) Corporate Marketing team by September 2012
o Further clarification of LBC’s governance processes for the management
of this project
Note match funding of £60k from LB Croydon to support the delivery of this
Note additional match funding of £1.3m from LB Croydon to support the wider
package of business support measures.
2.2 The BRR initiative seeks to:
Create or maintain 1311 gross jobs (based on 69 companies leasing premises at an
average of 19 employees)
Support 839 indirect jobs1
Reduce vacancy by 9% in office accommodation stock within CNT
The Scottish Executive multiplier relating to a typical office occupier (e.g. IT Company) 0.64 jobs is
3 Background and context
3.1 Croydon Opportunity Area (COA) is London’s third largest office location after the City
of London and Canary Wharf with approximately 550,000 sqm of commercial space. The
scale of the office market, its low cost base, strong labour pool together with the strength
of its public transport connections into London and to Gatwick and the South Coast
mean Croydon should be in a strong and competitive position for economic growth.
Central Croydon has been identified as one of the Mayor’s Opportunity Areas.
3.2 Despite its strategic position, approximately 30% commercial stock across the COA is
vacant (compared to and England and South East average of 9%), and 15,000 jobs have
been lost over the past 20 years. Average rents are in decline.2
3.3 The downward trend in take up of office stock in Croydon over the past 10 years is
Croydon Office Rental take-up rates 2001 - 20113
3.4 The South London Property database appears to show a rapid worsening of the Croydon
office market over the past 12 months, with more than double the amount of properties
available, and the average length of properties on the market rising by over 50% year on
year. Furthermore the total take up of commercial office space in 2011/12 was 7,386 sqm
or 4% of the available vacant space, the lowest amount since 19924.
2 Average rents in a 2010-11 survey reported to be £23 psf but they are currently £20spf.
3 Stiles Harold Williams Croydon Office Market Focus January 2012
4 Stiles Harold Williams Croydon Office Market Survey
April 2011 April 2012
Total properties available 303 717
Average time on market 176 days 342 days
South London Business database
3.5 Without further incentives such as business rate relief, the relative affordability of some
office stock appears insufficient to lead tenants to lease space particularly from within the
SME sector which has been leading growth over the past 20 years and may otherwise be
attracted by Croydon’s excellent transport connections. Analysis within the OAPF
drawing on a number of sources5 provides some insight into the reasons for this
o Very limited development activity over past 30 years means the majority of office
stock dates from 1960s & 70s and is of low quality by contemporary standards
o There has been more competition from both neighbouring areas and new office
centres including Canary Wharf and more recently Stratford where office space is
slightly cheaper and also newer
o The spaces themselves are geared to service large back office requirements rather
o Poor condition of public spaces and town centre together with negative
perceptions of the town particularly following the riots of August 2011 reduce
attractiveness to potential newcomers.
3.6 In general terms, the business model of SMEs makes it difficult to access the best rents.
Leases of up to 15 years in Croydon can be let as low as £14.40 psf6 but SMEs are
unlikely to commit to this length of lease given the uncertainties facing businesses in
their growth phases. Consequently the perception of ‘cheap’ rents may not apply to
potential SME tenants. In an on-going property survey conducted by South London
Business, unsuitable price of property was cited as the primary reason that businesses did
not take on office space. This equated to 31.8% of the businesses surveyed7.
3.7 Croydon is seeking MRF funding for specific interventions to stop further decline in the
market and to build a more sustainable business base. Broader public realm
improvements are being tackled by the Connected Croydon Programme into which the
GLA is investing £18m and Croydon have been working with a range of partners on an
integrated Croydon Business Offer (CBO) to support and enhance business in the area.
3.8 The GLA funded Business Support Package (BSP) seeks to;
o Create a new incentive for SMEs to commit to Croydon as their business base
through the application of business rate relief
o Create a ‘pipeline’ of tenants to incentivise landlords to invest capital in upgrading
their office stock, particularly in the CNT area were LB Croydon wants to focus
growth through business rate relief
o Develop the conditions and networks for new growth sectors and innovative
businesses to establish themselves in CNT
3.9 The wider CBO within which the BSP sits includes:
5 OAPF sources included the Centre for Cities Study Linked In: Realising Croydon’s potential now (2011), the GLA
London Office Policy Review (2009) & Drivers Jonas Croydon Metropolitan Centre Retail Strategy (2009)
6 SHW Office Focus – First Quarter – April 2012 Page 3
7 South London Business Property Survey – Page 5
£50m public realm improvement programme including public realm, transport
and accessibility improvements in the town centre (£18m of MRF funding)
Regulation review ensuring that LBC’s statutory obligations in licensing and
regulation are conducted in an efficient and proportionate way that fosters good
A pre-planning process which has been established to provide the development
industry with a considerable degree of certainty
Co-ordinated Employment & Skills Programme – a borough-wide approach to
increasing employment rate through work programmes, flexible support, family
support, employer engagement and apprenticeship accord
European Funding initiatives to support to be used to promote sustainable
economic growth while improving the environment including
o Inspire South London – helping SME’s achieve environmental
o Built to Compete – support SME’s secure public and private sector
contracts with a focus on the construction industry
o Finance for change – supporting SMEs to access finance
o Gateway Asia – supporting SMEs to trade internationally
Inward investment tools & branding toolkit for Croydon
Financial and political support for the Croydon Business Improvement District
Develop Croydon consortium a private sector-led body promoting development
and economic renewal in Croydon
Support for applications to the Growing Places Fund available through the Coast
to Capital Local Enterprise Partnership to unblock stalled new developments to
bring forward business and employment growth.
Business Rate Relief
3.10 Within the BSP, the proposed Business Rate Relief initiative would be a 2.5-year
programme running from 2012/13 to 2014/15 targeted exclusively in the Croydon New
Town (CNT), which due to its accessibility and general character has been identified in
the OAPF as the focus for business intensification and employment growth.
3.11 The relief would be offered to businesses moving into premises with a rateable value of
£25,500. The average size of premises within this valuation band is 232 sqm which has
been chosen to support larger SMEs with around 15-25 employees. The scheme has been
tailored to complement the Government’s existing Small Business Rate Relief Scheme
which currently applies to businesses located in premises with a rateable value below
£25,500 in London.
3.12 Research shows that businesses are most likely to fail from their start up to 18 months.
One of the main reasons is cash flow which BRR can mitigate to some extent.
Additionally the support may release funds to invest in the workforce, making the
businesses more resilient and competitive and leading to a stronger local business base
and more sustainable further business rate revenues.
3.13 The prioritisation and structure of the proposed rate relief has been designed to respond
to a number of the findings of national8 and GLA9 research projects into Enterprise
Zones. (LB Croydon’s approach set out along side the finding):
8Taylor,P (2011) Making Enterprise Zones Work: Lessons from Previous Enterprise Zone Policy in the United Kingdom
citing HMSO (1995). A Further Assessment of the Enterprise Zone Policy.
9 GLA internal research note Business support – lessons learnt from the Royal Docks Enterprise Zone
BRR was the most important factor in encouraging businesses to relocate to Enterprise Zones
in both round 1 and round 2 of Enterprise funding. The next most important factor was the
availability of office space: Croydon is using BRR as one of the key business incentives
and is applying it in an area where there is ample available office stock
Once established in an area, business tend to remain and maintain their existing employment
levels because the location they had chosen was meeting their operational needs: BRR is to be
used as an upfront incentive to build the business base but in parallel, LBC is working
through the Connected Croydon programme to transform the environment of Central
Croydon so that businesses remain satisfied with the area
BRR should apply for no longer than 5-years, as after this time period the rate relief is
absorbed by a general uplift in rents: LB Croydon are proposing a 3 year horizon
The approach should be based on a clear vision of the type of companies and sectors that should
be attracted to build longer term competitive advantage: LB Croydon is focused on
reducing the risk for small SMEs to expand by providing a financial subsidy for
accommodation of up to 20 staff on average. It is also focused on the CNT area in
order to build a critical mass of businesses within Central Croydon for agglomeration
effects to start to occur
There should be an integrated approach to providing business support particularly as it related
to training and access to finance; BRR is one part of Croydon’s CBO. Benefitting
businesses will also be able to access the Finance for Change project which introduces
Croydon SMEs to potential sources of finance and methods of improving their
readiness for investment. The programme runs until 30th August 2013.
The importance of promotion and marketing arrangements for the zone: A business
communications plan is proposed – see section 6.f below
3.14 Under the programme, businesses moving into premises with a rateable value of £25,500
and over would be offered up to 3 years of tapered financial assistance to support
businesses them through the early expansion stages. The business rate will be staggered
so that businesses benefit from 65% relief in their first year, 35% in the second and 20% in
the third. Businesses can apply at any time but can only benefit from the relief up until
the end of the programme.
3.15 To address the risk of deadweight, business rate relief will be offered to:
New businesses moving to the borough
Growing businesses that are relocating to take on additional space and create
4 What has changed since the Stage 1 Proposal
4.1 Detailed work has been undertaken with LB Croydon to
Establish the quantum of eligible space
Substantial the potential demand for office space at the target rateable value
Model the potential cost above the eligibility threshold
Develop the delivery mechanisms.
4.2 As part of this work, further review about the funding constraints of the MRF has been
undertaken and it has been established that the MRF can only guarantee revenue funding
up until March 2015 for this programme. This means that the proposed ‘fourth’ year
extension of the programme, approved provisionally at Stage 1 to incentivise take up of
the scheme through increasing the opportunities for three years of funding is not
possible. The programme has been remodelled to end at March 2015 and the levels of
rebate amended from year 1: 50%, year 2: 25%, year 3: 15% to year 1: 65% year 2: 35%
year 3: 20%. These levels have been calculated to attract businesses who are early
applicants and can benefit from three years funding but also to ‘front end’ the funding so
that remain attractive for businesses who apply later in the programme but can benefit
from only the initial reliefs. The overall grant requested has reduced from £1,153,047 to
£1,114,335. The use for the balance of the remaining stage 1 funding within the Business
Support Package will be discussed with the GLA in due course.
4.3 However LB Croydon have asked to redirect the funding originally approved to stage 1
level for the Office Sector Improvement Grant to a package of socio-economic support
focused on West Croydon.
5 Key financial facts and issues
5.1 The funding required for BRR is £1,114,335 revenue.
5.2 As per the Connected Croydon programme, the GLA Business Support Package
investment is part of a broader programme of complementary activities within the
Croydon Business Offer which are funded by LB Croydon and other partners. Match
funding is consequently monitored at a project and a programme level.
5.3 At a project level there is currently 5% matching funding which comprises c£60k LBC
revenue match funding to manage, deliver, promote and evaluate the project.
5.4 At a programme level there is £1.3m LB Croydon match and a further £5.1m from
other sources coming from:
ERDF programmes supporting environmental performance enhancement for SME
business accommodation, (access to finance for SMEs); supply chain and procurement
advice to SMEs. LBC £126k, other sources £1.1m
Supporting for the Croydon BID for the duration of the MRF: LBC £120k, £4m
LBC Revenue support for Inward Investment activities: £0.35m pa for the duration
of the programme, a total of £1.05m pa
5.5 The BRR programme has been structured, to allow businesses to benefit over the three
year period, with relief starting at 65% in year one and dropping to 20% in year three.
Based on a 52% take up of all available space falling into the £25,500 + leasehold value
category by the end March 2014 and assuming an average rateable value of £39.9k per
annum as per the actual valuations of targeted buildings (see the funding requirement is:
cohort Total Rate Relief
Year 1 - 2012/13
Staged start to reflect project start
Cohort 1 (starting Oct - Jan 2012/13) 6 35,946
Cohort 2 (starting Jan - Mar
2012/13) 6 17,973
Sub Total 12 53,919
Year 2 - 2013/14
Cohort 1 & 2 118,899
Cohort 3 (starting 2013/14) 30 359,463
Sub Total 30 478,362
Year 3 - 2014/15
Cohort 1 & 2 64,980
Cohort 3 193,557
Cohort 4 (starting in 2013/14) 27 323,517
sub total 27 582,054
Year 4 - 2015/16 1,114,335
Sub Total 0
Grand Total 69 1,114,335
5.6 The maximum subsidy assuming the average rateable value is c£21k over the three
years which is comfortably within the State Aid regulations.
Total GLA investment profile
5.7 The total cost to the GLA will be as below
Cost by year
Business Rate 54 478 582 1,114
6. Practicalities of project delivery
a) Timetable and Milestones
6.1 BSP Programme Level Milestones
Milestones, deliverables and promotional activity Forecast
GLA Stage 2 approval July 2012
Grant Agreement completed August 2012
Recruitment of LBC’s BSP project manager July- September 12
Interim evaluation start-finish (LBC self assessment) July 14 –Sept 14
BSP programme completion TBC dependent on Innovation
Final evaluation start and finish (external assessment) TBC dependent on Innovation
6.2 Business Rate Relief
Milestones, deliverables and promotional activity Forecast
Preparation period – financial systems, monitoring, launch August - September
Launch scheme September 2012
Rate relief period October 2012 –
Evaluation April 2015
b) Project Resources and Delivery
6.3 The BSP programme will be managed through the LB Croydon Economic
Development team to secure the focus on employment growth and inward
investment. A dedicated BSP Project Manager will be recruited with overall
responsibility of ensuring that the BSP is delivered within agreed timeframes and
budget. There will be close partnership with the revenue team to enable the
distribution of the relief and the marketing team to support communication. The
administration of this programme will draw on LBC’s other experience of running
grant distribution programmes as well as rate relief programmes, particularly
drawing on experience post-riot.
6.4 LB Croydon is currently defining the governance arrangements for revenue funded
socio-economic projects such as BRR. One potential route is via the Corporate
Services Committee (CSC). The Corporate Sponsor will be Deputy Chief Executive
who chairs the CSC board.
6.5 From within the GLA, the project will be delivered within the Development &
Environment Directorate of the GLA. It will be overseen specifically by the Mayor’s
Regeneration Fund team but will be subject to governance and monitoring
procedures which are coordinated across the directorate.
6.6 The GLA policy team has been involved in the review of the proposed interventions
and lessons learnt from the Enterprise Zone Business Rate Relief modelling have
been shared with LB Croydon.
6.7 The BSP as a whole will also be overseen at a strategic level through regular
meetings between the GLA and LB Croydon respective Executive Directors and via
the Croydon Riot Recovery Task Force.
c) Cost benefit analysis
6.8 The BRR will support -
The retention or growth of circa 69 businesses.
The retention of growth of circa 1311 gross jobs
It is anticipated that a further 839 indirect jobs will be supported by this initiative.
6.9 This forecast is a capacity-based analysis of the number of mid sized SME businesses
that could be accommodated within the 16,066 sq m of vacant grade A premises in the
CNT area, that LB Croydon has identified as being the most eligible for the BRR and
which have a current rateable value of £25.5k.
6.10 The output forecasts are based on the following assumptions
Business spaces at this rateable value will be at least 232 sq m
This space would accommodate around 19 staff based on 1 staff member per 12 sq m
Further disaggregation of gross jobs into jobs retained and additional created
through the programme will be required as part of detailed evaluation
6.11 LB Croydon have been cautious in their forecasts to minimise the risk of optimism
bias and a number of discounts have been applied to the total potential outputs. The
target quantum of 16,066 sq m forecast floorspace
includes only premises at the current rateable value which are at least 40% vacant.
excludes vacant premises that are currently above the minimum size but would fall
under the threshold if sub-divided further to cater for the likely space requirements of
this results in a target take up of 52% of vacant stock above the £25.5k threshold
which represents 9% of the total vacant stock in CNT at a quantum of 170,000 sq m.
6.12 There is reasonable evidence that there is sufficient potential demand for office space
if the right incentives are put in place to bring the businesses into central Croydon.
The South London Property database registered 295 businesses looking for office
space within the target size bracket for BRR (2-400 sqm) in the 2011-12 financial
year. This number does not include businesses who were seeking space categorised as
‘other’ which may include companies with flexibility on the nature of accommodation.
6.13 It is recognised that this initiative may cause some displacement of businesses from
one area of Croydon into the CNT. Although this may limit the additionality of the
initiative, it will still contribute to the OAPF objective of creating a concentrated
business hub in the CNT area. Encouraging established businesses to take the next
step into larger accommodation will also help release smaller units for new
businesses. Furthermore, although the BRR is designed to be sufficient to encourage
businesses to relocate in Croydon rather than another location, when offset against
moving costs, the relief levels have not been set so high as to encourage businesses to
relocate solely to benefit from it.
Cost benefit outline:
GLA Group £1.114m MRF revenue funding for business rate relief
Other LB Croydon are committing £200k to support the delivery of the total
costs/funding Business Support Package, of which it is envisaged £60k will be used to
deliver the BRR element.
LB Croydon have also committed £1.3m to the delivery of other
projects within the wider Croydon Business Offer (CBO), of which BSP
is one element. As detailed above the CBO is also being supported by
£5.1m from other sources
Financial No of jobs x average wage x Annuity factor for 3 years (0-2) x (GVA:wage
benefits costs) x additionality
how many) 1311 x £12,000 x 2.8997 x 2 x 0.01 = £912,362
Value of costs:
£1.114 million + £60,000 = £1.174million
Other The retention or creation of circa 1311 gross jobs
benefits Support for 839 indirect jobs through the supply chain
(provide Improved perception of Croydon as a place to do business
details below) Additional footfall within retail centre
Cost-Benefit BCR per 1% real additionality = £912,362 ÷ £1,174,335 = 0.78
Group) This implies break-even at 1.28% real additionality
Cost per job : £1,174,335 ÷ 1311 = £896
Cost per real additional job @ 1% = £1,174,335 ÷ 13.11 = £89,755
d) Legal and procurement
6.14 The GLA is satisfied that the interventions accord with the powers of the Local
Authority and EU procurement requirements.
6.15 LB Croydon Legal Services have reviewed the proposals and have noted the following
considerations in terms of their ability to manage the investment;
Section 69 of the Localism Act 2011, by amending section 47 of the Local
Government Finance Act 1988, supplements the existing small business relief
scheme outlined at paragraph 6.2 of this report with a wide discretion for local
authorities to give discretionary relief for business rates with a power to grant
relief in any circumstances. This is subject only to the condition that, the local
authority may only grant relief if it would be reasonable to do having regard to
the interests of the council tax payers in the Borough.
The Council will also have to have regard to any Guidance issued by the
Secretary of State concerning these powers although to date no Guidance has
been issued. Under the Localism Act 2011 (Commencement No.2 and Transitional
and Saving Provision) Order 2012, this power will be in effect from 1 April 2012
which is the date from which the scheme may run.
In relation to the Office Improvement Grants proposals, this is within the powers
of the Council. Section 2 of the Local Government Act 2000 provides that the
Council may (with certain exceptions) do anything it considers likely to promote
the environmental, social and economic well-being of the area. In exercising this
power, the Council should have regards to the Community Strategy. Relevant
aims of the Council’s Community Strategy with regards to these specific proposals
are the aims of developing an enterprising city, a connected city and a sustainable
To comply with state aid rules, it is important that each individual recipient of
grant aid receives less from the Council than the ‘de minimis’ level of aid which is
set at 200,000 Euros. In calculating the aid received, the Council will need to take
into account any previous public assistance received by the proposed recipient
over the last 3 years. All grant recipients will be required to complete the
standard GLA De minimis State Aid declaration form in line with the MRF
e) Impact assessments; Consultation
6.16 These projects have been informed by the extensive consultation with landowners
and businesses undertaken by the Council during the development of the emerging
core strategy, Croydon masterplans and OAPF. As part of Croydon’s submission to
the GLA for an Enterprise Zone in June 2011 major businesses within the town
centre were consulted at various forums and showed their support for the proposal.
The Develop Croydon Forum, the private sector led industry consortium which acts
as a consultation board for the development community and promotes Croydon as a
place for business has expressed their support for this initiative.
6.17 The business community has strongly showed their support to investing part of the
Mayor’s Fund to stimulate Croydon’s office market by providing an incentive for
businesses to relocate to Croydon, business rate relief being one of the top priorities
6.18 In preparing the package of support for businesses and as part of the implementation
of various projects different partners and local communities have been consulted over
a period of time. The proposed measures have been developed taking into account the
consultations on the OAPF and the master planning exercises covering defined areas
of the borough.
f) Marketing and communications
6.19 The BRR initiative will be launched with an integrated communications campaign
targeting corporate & SME companies, property owners and their agents both in
Croydon and beyond. Croydon will identify target businesses in partnership with
Business Improvement District and South London Business Partnership. The
campaign will highlight the benefits of CNT as business location whilst also raising
awareness of the various BSP incentives on offer.
6.20 The campaign messages will be targeted across traditional media channels but will
also Croydon’s extensive formal and informal networks, activities to include:
Press releases & briefings targeting;
Local newspapers and websites
Regional newspapers and business press
Local business forum briefings
Trade shows & conferences
Sector based approaches
Social media activity across Twitter, LinkedIn, GumTree & Craigslist
6.21 The following risks have been identified:
Risk Likelihood Impact Rating Mitigation
Relocation/closure of 2 4 8 Some businesses may close at this
businesses after rate point due to viability, which may
relief ends be unavoidable. LBC to consider
initiatives to help retain
businesses after March 2015
during course of programme.
Incentive causes 2 3 6 Objective is to retain and grow
displacement of businesses that may otherwise fail
businesses within or relocate on the basis of current
Croydon, leaving more trends
empty properties out
CNT and no net increase
in businesses and
Insufficient demand to 2 5 10 GLA able to claw back money. To
take up the allocations. counter optimism bias, output
targets have been based on highly
discounted capacity analysis.
f) Evaluation and reporting
6.22 GLA Economics have worked closely with LB Croydon to establish the basis for
output and outcome forecasts. This work is ongoing. The options for evaluation of
the Business Support Package project and the wider Regeneration Fund programme
in Croydon are currently being explored by Croydon Council officers.
6.23 At project level it is proposed that evaluation is carried out in two stages:
Programme Monitoring – the LB Croydon BSP Project Manager will be
responsible for monitoring and reporting the following to the GLA on a monthly
basis in line with the Funding Agreement -
o financial profile– forecast against actual
o Anticipated outputs based on committed spend to date
o Milestones and progress made across each project
o Issues and solutions
Final evaluation – the GLA will carry out a detailed evaluation at the end of the
project which will cover the following areas in addition to those above
o Overall impact on the area
o Beneficiaries’ views- quantitative and qualitative data and analysis
o Lessons learnt
o Recommendations for post project review.
6.24 This will be in line with the MRF evaluation process which is currently being agreed
on a MRF programme level.
6.25 The GLA evaluation will also require basic output data for each project which
Croydon will be obliged to monitor and record during project delivery (based on
outputs agreed with GLA Economics).
g) Exit strategy
6.26 At the end of the MRF programme period all business rate eligibility awards will
have been made with all awards committed and final payments made during 2014/15
6.27 The extension of both the BRR rent relief period funding will be subject to the
fulfilment of pre-conditions as outlined in the recommendations section above. The
GLA will retain no liability for BRR beyond the end of the programme period.
7. Background/supporting papers
Appendix 1: EIA schedule
8. GLA assessments and comments:
Legal and The proposals appear to fall broadly within the GLAs powers to do such
procurement advice: things as may be considered facilitative of or conducive to the promotion
Public Law team/ of economic development and wealth creation in Greater London.
and Projects team Paragraph 6 above indicates that the contribution of £m1.153 to
comments on this London Borough of Croydon will amount to the provision of funding
proposal. and not a payment for services rendered. On the basis that this payment
is to be funding, as opposed to the procurement of services, the
Contracts and Funding Code (the ‘Code’) requires the Authority ensure
that the funding is distributed fairly, transparently and in accordance
with the GLA’s equalities obligations.
In particular officers should also work with the London Borough of
Croydon to ensure (as noted in paragraph 6.15 above) that each end
recipient of grant aid receives less from the Council than the ‘de
minimis’ level of aid.
The Code also requires the Authority to demonstrate value for money
in the allocation of this funding.
Officers must also ensure that all relevant approvals are obtained (via
DD/MD as appropriate) and a funding agreement is put in place
between and executed by the London Borough of Croydon and GLA
prior to any binding commitment to the funding being made.
Financial and MD895 gave approval for the £70 million overall programme budget
budget advice: for the post-riots interventions £50m of this budget is for Mayors
Finance team Regeneration Funding (MRF) with the remaining £20m grant funding
comments on this from DCLG for London Enterprise Fund (LEF) that is ring-fenced for
proposal on behalf of Tottenham and Croydon.
the Assistant Director
of GLA Finance. This paper is to present the Stage 2 Project Appraisal for £1.153m
grant funding to London Borough of Croydon for a Business Rate Relief
incentive for Croydon’s main office district, Croydon New Town (CNT).
The project is to be funded London Enterprise Fund (LEF) programme
Before is proposal is developed further clarification should be sought
from DCLG about the spending of the funds to 2015-16.
Officers should also ensure that the requirements relating to the
Authority’s Contracts and Funding Code is met.
As part of the budget monitoring process officers will be responsible for
assessing Croydon’s grant claims against the funding agreement and
take any remedial action should output and costs vary from the
agreement. The funding agreements should clearly state milestones to
be met in order to claim funding and clawback arrangements put in
place if delivery is not progressed in line with milestones stated in the
Project impact and Longer term benefits are claimed to flow from the attraction or
value for money: sustaining of the businesses. These take the form for example of
GLA Economics clustering economies and the attraction of private sector investment in
comments on this refurbishment No attempt is made to quantify these longer term
proposal including benefits.
considerations as to
whether it addresses Analysis has therefore focussed on the GVA benefits that flow from the
the cause of a market claimed level of job creation. The clear critical factor here is the level of
failure and whether genuine additionality (that is, how many of the claimed jobs are truly
social or economic additional and not simply moved from other areas (displaced) or would
benefits outweigh the have been created in any event (deadweight)). The approach adopted in
costs of the the paper is to estimate the GVA benefits of each 1% of genuine
investment additionality and, from this, the level of additionality required to “break-
On the assumptions set out in the paper, rough calculations suggest that
genuine additionality would need to reach 1.28% (that is the scheme
would need to generate around 17 truly additional jobs) to break even.
If there is no genuine additionality – a not unrealistic prospect - the
worth of this scheme is contingent on the longer term benefits which
have not been estimated.
Public access to information
Information in this form is subject to the Freedom of Information Act 2000 (FOI Act) and
other legislation. Part 1 of this form will be made available on the GLA website within 1
working day of approval. Any facts and advice that should not be made automatically
available on request should not be included in Part 1 but instead on the separate Part 2
form. Deferment is only applicable where release before that date would compromise
the implementation of the decision being approved.
Is the publication of this approval to be deferred? YES/NO TBC
If yes, for what reason:
Until what date:
Is there a part 2 form - YES/NO
PART 2 – CONFIDENTIAL FACTS AND ADVICE
The information below is not for publication until the stated date because:
[insert grounds for keeping the information confidential]
Information will cease to be confidential: Insert date
The confidentiality should be reviewed: Insert date
Legal Advisor - I agree with the above recommendations that this information should be
considered confidential at this time
[Any confidential or market sensitive information to be added here]