• Home
  • About
  • Subscribe
  • Conference
  • Events Calendar
  • Webcast151
  • MOTB
  • Log In
  • Register

Room 151

  • Treasury
  • Technical
  • Funding
  • Resources
  • LGPS
  • Development
  • 151 News
  • Blogs
    • David Green
    • Agent 151
    • Dan Bates
    • Richard Harbord
    • Stephen Sheen
    • James Bevan
    • Steve Bishop
    • Cllr John Clancy
    • David Crum
    • Graham Liddell
    • Ian O’Donnell
    • Jackie Shute
  • Interviews

Mark Barrow on LEPs, TIFs & the pursuit of growth

0
  • by Jo Tura
  • in Funding · Interviews
  • — 15 Mar, 2013

Mark Barrow is strategic director for development and culture for Birmingham City Council and company secretary for the Greater Birmingham and Solihull Local Enterprise Partnership. He has been with Birmingham since September 2010 and was previously chief executive of Newcastle-under-Lyme Borough Council.

Room 151: Lord Heseltine has talked about a single funding pot for LEPs to bid for. How much would the Greater Birmingham and Solihull LEP be entitled to?

MB: If you grab Heseltine’s figures, and they are probably around £70bn over the CSR period, and take a per capita approach to that on our LEP geography you are in something like £2.5bn territory. We are about 3.8% of the population as a LEP.

If you add into that the various ratings in terms of where streams of that cash go, you are into £3bn plus. So it breaks down to £750m, towards a billion per year.

One of the key things that we are all going to be looking for is an understanding of what scope there is for recalibration and re-alignment. It is great for us to come up with our local economic strategy, it’s a nice filter where we can start to say, OK, resources follow priorities and that is all rooted in evidence, but how do all these things fit? That is going to be the challenge going forward: asking what is in play and how it fits with the things that we are already doing, the use of our own assets and borrowing potential, for example. How does it all interact to make the sum greater than the individual parts?

There is some big stuff in Heseltine’s work. You look at No stone unturned… and there is a lot of stuff around skills there. Reorienting the skills delivery sector is not an easy thing to do. At the heart of it is moving away from a demand-led model, where young people turn up and ask for what they want to, to a model where we say ‘this is what our economy needs’.

There are all sorts of mechanisms in there to think about how to aggregate. At the heart of it though is the idea that it is right that those kinds of decisions should be taken locally. There should be local ownership of that and a connection between the resources available and what the local economy needs.

Room 151: So £750-1bn per year would be over what period?

MB: Heseltine suggests a four-year period, but everything around comprehensive spending reviews seems to have got lost recently. There used to be this nice cycle which we felt we understood but things seem to have lost their routine a bit recently. It is a bit like having the Autumn statement in the middle of December isn’t it?

The other thing, and maybe this is where City Deals 2 comes in, is what can we do in advance of 2015? Heseltine’s talking about a system for April 2015, but we all need economic recovery now. It’d be nice to get on with some stuff instead of waiting to see what it all looks like when it is finally cooked and baked.

Room 151: You talk about using your own assets and borrowing. What kinds of things are you thinking about there?

MB: Birmingham City Council is the accountable body for the best part of £400m coming through the LEP. We have already borrowed the first round of Tif money that relates to the Enterprise Zone.

We are also the accountable body for the Regional Growth stuff. We’ve got some programmes running there and are also managing a national scheme for government called the Advanced Manufacturing Supply Chain Initiative; a fund that supports the supply chain in manufacturing, where firms can’t get access to finance from banks. There is £245m in there and it is a national fund that we are managing and delivering.

Room 151: Why?

MB: We made a submission in RDF round two for the fund on a local level. In our area we have a resurgent Jaguar Landrover, aerospace and a few other things and we are keen to make sure that their supply chain are able to access cash. The sector associations like the Society of Motor Manufacturers said, what a good idea, we should have that nationally.

Government thought it was a good idea too and wanted to support it so it went from £25m for the West Midlands to £125m nationally. Then, in the last round of RDF it was doubled, based on the success that we have had moving money into the market.

Room 151: Is it the city council finance department that runs the money?

MB: No, we have an organisation that we wholly own, a company called Finance Birmingham, which is like an investment company that you would see in the private sector. It’s also managing a loan fund and an equity fund and it is FSA registered.

So we’re the accountable body, as a city council and we get sign off on investment decisions, but the investment evaluations and due diligence and monitoring are done by Finance Birmingham. We’ve created a neat model to translate between the world of public and private and this is what people are looking for at the moment. The world of LEPs is private sector led but backed by public sector money. We think we have managed to get the balance right. It’s interesting as a sense of a way forward for LEPs in the new world, because that is what people are going to struggle with. Can you devolve a billion pounds to a LEP? You have got to think about who has the capacity to manage it, where the democratic accountability is, the transparency. None of that is new but this is all just bringing it to the fore in a joined up arrangement.

Room 151: The project rate for LEPs is interesting in that context, how do you see that playing out?

MB: LEPs across the country are all different shapes and sizes. We have set ours up as a company and it has a legal personality. Most don’t and are just loose associations and partnerships. So you will need local authorities to provide the structure in a governance sense as accountable bodies. I guess if you think that through, if that wasn’t the case, would we be creating 39 mini-Regional Development Agencies? Because if the money went straight to them you would introduce something between government and the council.

So in that sense the model as it is is right and fine. There is a degree of assurance about how councils manage large chunks of money. If you look at PWLB that is a factor. PWLB is useful if you want to borrow money today and get a rate today, but the other thing is if you’re looking more long term, as LEPs are going to do, then you might be thinking about the European Investment Bank so you could forward-fix rates. That is a new dimension because if you’re going to get revenue streams that you can borrow against like Tif around Enterprise Zones, you can start to think about planning future borrowing and you are into a different territory. That is where the UK’s rating kicks in.

Room 151: It has gone a bit quiet on the whole project rate story hasn’t it?

MB: Yes, we’ve been trying to do a bit of digging. We as a city have our own triple A status, but then you end up into the realm of what is the status of the counterparties. If up the chain you have a lesser rate than you, what does that mean? The big thing is do we stand on our own right through our own revenue and the value of our asset base?

The older places in the country which have got big asset bases built up over many years have got a lot of coverage against their borrowing in a number of ways. We have still got our housing stock and so have a big asset base and that is an important foundation in this. I think everyone is waiting for a bit of clarity.

Room 151: You have plenty of shovel-ready projects that you can put forward for the project rate haven’t you?

MB: We have got loads of projects, we’re good at lining up things to move forward and the big thing that government wants to hear is what is the gearing involved? If you can do this today what does it unlock from the private sector?

Room 151: Where are you with Tif?

MB: Our Enterprise Zone by value is by far the biggest in the country. The business rate growth rises to about £875m over the life of the EZ, so that is the stream we can borrow against. We’ve already taken a decision against the first £128m and some of that money is coming into play, and it is the Tif model that funds the Enterprise Zone.

There is a lot of effort involved to understand what your baseline is initially, then quite a lot of effort to make sure that you are capturing early growth, if that makes sense. Because as you might imagine, in a number of sites you have got demolition first, so your income flow drops because you are taking things out of the business rate pool for a while.

The challenge, as always, is managing the first few years: it requires pretty close monitoring but we are feeling confident.

Share

You may also like...

  • NAO: Councils’ commercial property activity raises questions over prudential framework NAO: Councils’ commercial property activity raises questions over prudential framework 13 Feb, 2020
  • Mark Luntley on the local authority collective bond agency Mark Luntley on the local authority collective bond agency 28 Jun, 2012
  • Spelthorne: Setting the record straight on commercial investments 24 Jun, 2020
  • Post-Brexit regional aid plan risks losing ‘billions’, says LGA Post-Brexit regional aid plan risks losing ‘billions’, says LGA 5 Jul, 2018

Leave a Reply Cancel reply

You must be logged in to post a comment.

  • Register to become a Room151 user

  • Latest tweets

    Room151 17 hours ago

    New realities of investing cash and liquidity: “What to do now?”: Sponsored article: Brian Buck looks at the “unique challenge” for cash management strategies. As investors assess the ongoing impact of the pandemic on their business, levels of cash and… dlvr.it/RqVbk9 pic.twitter.com/ZElVASmEUV

    Room151 20 hours ago

    Extra finance promised by the government receives a broad welcome: Sponsored article: The financial pressures facing local authorities this year continue to pose challenges for council treasurers. While the launch of the UK’s Covid-19 vaccination… dlvr.it/RqTzTF pic.twitter.com/HCjH0pyHR5

    Room151 20 hours ago

    A savvy approach to managing your cash: Sponsored article: Caroline Hedges examines the need for active cash management to achieve a higher than average return. Last year saw the already mountainous pile of negative-yielding debt around the[...] dlvr.it/RqTzMK pic.twitter.com/uP0RQYTJLt

    Room151 2 days ago

    Putting alternatives at the heart of multi-asset portfolios: Sponsored article: Nick Edwardson looks at the assets that provide the “most attractive opportunities”. We believe that asset allocation is the primary driver of investment returns and that the… dlvr.it/RqQ2Qt pic.twitter.com/WLBzvRRRUQ

    Room151 2 days ago

    Thriving in the pandemic: Avoiding the stragglers: Sponsored article: George Crowdy looks at the sectors providing opportunities for sustainable investment. Throughout much of 2020, we talked about why sustainable investing has thrived in the pandemic,… dlvr.it/RqQ2NQ pic.twitter.com/dxiPWKFsPl

    Room151 2 days ago

    The development of CCLA’s mental health benchmark: Sponsored article: Amy Browne examines the importance of investing in mental health in the workplace. We are living through a public health emergency in more ways than one. Physical health[...] dlvr.it/RqQ2Jx pic.twitter.com/o6yRSCX3oF

    Room151 3 days ago

    Brexit: What the EU trade deal means for the UK economy: Sponsored article: Hetal Mehta looks at the impact of Brexit on economic prospects. Four and a half years after voting to leave the EU, on Christmas Eve the UK finally[...] dlvr.it/RqLBDt pic.twitter.com/No62srfE8h

    Room151 3 days ago

    Cash dethroned: The quest for liquid yield: Sponsored article: Peter Hunt and George Carne ask how treasury departments can balance the need for yield and liquidity. The massive stimulus and waves of liquidity provided by central banks[...] dlvr.it/RqLBDj pic.twitter.com/05g6Zhu1kU

    Room151 3 days ago

    Richard Harbord: Delayed “capital determinations” make section 25 opinions a new crunch point: The severe pressure on local government budgets now means section 151 officers confront a tricky call on  whether they can make a judgement on the robustness… dlvr.it/RqLBDV pic.twitter.com/vTAbDKFzkI

    Room151 4 weeks ago

    PWLB Consultation: Analysis straight from Dickens: Helen Radall and Paul McDermott present a legal examination of the new PWLB borrowing rules as Charles Dickens might have imagined it. Free and easy PWLB (“Marley” to his friends)[...] dlvr.it/RnmwLq pic.twitter.com/yFxcPrQqEG

    Room151 4 weeks ago

    Room151’s top stories from a momentous year: 2020 was the year in which local government grappled with Covid-19, funding strains, controversy over borrowing rules and the threat of financial collapse. It has been an exhausting and historic[...] dlvr.it/RnlpZg pic.twitter.com/g3myNyox6J

    Room151 4 weeks ago

    Tracy Bingham: 2020, a year best forgotten but also one of learning: Many will rush to erase 2020 from their memories but, writes Tracy Bingham, there were also many lessons about finance teams, strategic planning and leadership. 2020: A year we’d… dlvr.it/RnlpY2 pic.twitter.com/m7G1krrtCu

    Room151 4 weeks ago

    Settlement must address ‘precarious’ local government finances: Dan Bates crosses his fingers for “no nasty surprises” in this week’s funding settlement but argues the “bigger prize” is post-Covid financial certainty. Thursday (17 December) should be the… dlvr.it/Rnj9dG pic.twitter.com/KLKjjuBqJE

    Room151 1 month ago

    PWLB consultation: Big change on the way but there are ‘grey areas’ and opportunities: The consultation on PWLB borrowing has concluded creating a new landscape for funding property acquisition. Our experts look at the implications. Tracie Langley The… dlvr.it/RndRvJ pic.twitter.com/KEqXEBmEfq

    Room151 1 month ago

    2021: Better income outcomes?: Sponsored article: Investors should be mindful of structural challenges posed to income generation as a result of rapid thematic change. Jon Bell looks at the prospects for the coming year.[...] dlvr.it/RndRsw pic.twitter.com/TxVk8aXkMq

    Room151 1 month ago

    Capturing the ‘spirit’ of borrowing rules and a sequel for interest rate swaps: The year in treasury has been marked by a return for interest rate swaps and new rules from PWLB on borrowing for yield. Jackie Shute asks whether they will sprinkle[...] dlvr.it/RnQwv7 pic.twitter.com/it5FApdCcl

  • Categories

    • 151 News
    • Agent 151
    • Blogs
    • Chris Buss
    • Cllr John Clancy
    • Dan Bates
    • David Crum
    • David Green
    • Development
    • Forum
    • Funding
    • Graham Liddell
    • Ian O'Donnell
    • Interviews
    • Jackie Shute
    • James Bevan
    • Jobs
    • LGPSi
    • Mark Finnegan
    • Recent Posts
    • Resources
    • Richard Harbord
    • Stephen Fitzgerald
    • Stephen Sheen
    • Steve Bishop
    • Technical
    • Treasury
    • Uncategorized
  • Archives

    • 2021
    • 2020
    • 2019
    • 2018
    • 2017
    • 2016
    • 2015
    • 2014
    • 2013
    • 2012
    • 2011
  • Previous story Belfast arts investment, Cheltenham empty homes initiative, Lincolnshire collects on waste, Buy-to-let U-turn, MMF ratings
  • Next story Cypriot depositor bail-in a ‘game changer’

© Copyright 2021 Room 151. Typegrid Theme by WPBandit.

We use cookies to ensure that we give you the best experience on our website. If you continue without changing your settings, we'll assume that you are happy to receive all cookies from this website.OK