Blogs - 16 December 2014

Blog: David Ralph – The Challenges of Delivery

Speaking recently at the Nottingham Means Business’ event, I was reminding partners that the challenges of the LEP are now about delivery, delivery and delivery.

With largely a capital programme this relates specifically to development appraisals and viability assessments but can also be about marketing plans for sites – the Enterprise Zone or the D2N2 Growth Hub, which was launched last week, to name two examples.

The first question always has to be the safe and transparent use of public funding.

The LEP only gives funding where there is proven market failure. Government, and by definition, the LEP works to understand what it is buying with taxpayer’s funding.

We don’t fund development that would be happening anyway or schemes that are ‘nice to have’ but are of little real economic value. Interested parties often beat a path to my door asking for funding and more often than not the answer is no.  Public funding cannot be used anti-competitively.

Consequently, we often fund public infrastructure where the benefit is not to an individual party but to the wider population. Delivery also often relates to match funding.

As a rough rule of thumb, the LEP might contribute a 1/5th or maybe even up to a 1/3rd of a project. Being confident that the other funding is in place, often a loan to the organisation is often a real challenge as loans have to be paid back and therefore have to have a plausible model to do so.

Finally, the challenges of delivery are often about capacity. Often, site owners don’t actually have huge experience or resources to implement their schemes. They are reluctant to work directly with a commercial partner for fear of ‘losing their shirts’ and often their core business is making a product or providing a service rather than property development.

Consequently, when push comes to shove and deals need to be struck, managing risk can often outweigh the opportunity. Part of the LEPs role is to understand and mitigate these risks to provide the business confidence to get the scheme away.

David Ralph, Chief Executive, D2N2 LEP

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