9. WLEP BUDGET AND LOCAL GROWTH FUND PROGRAMME QUARTER 2 UPDATE

FAR COMMITTEE RECOMMENDSThat the WLEP Board notes and approves the:

1. current forecast position in respect of the 2018/2019 WLEP revenue budget, including balance of reserves as at end of Quarter 2,

2. current forecast position for Local Growth Fund 2018/19,3. budget available for Local Growth Fund 2019/20 and 2020/214. current position in respect of the Growing Places Fund

9.1 Purpose of the Report

To provide the Board with a position statement at the end of Quarter 2 relevant to the:

Forecast outturn position in respect of the 2018/2019 Growth Deal funded programmes;

Forecast outturn position in respect of the 2018/2019 WLEP Revenue Budget; The budget available for Local Growth Fund for 2019/20 and 2020/21 Current position in respect of the Growing Places Fund.

9.2 2018/19 Growth Deal funded programme

9.2.1 Table 1 shows the total Growth Deal funding for the WLEP from 2015/16 to 2020/21, giving a total funding allocation of £71.725m

Table 1- LEP Growth Funding Profile 2015/16 – 2020/21

Growth Deal 1/2/3 Profile Total

2015/2016 2016/2017 2017/2018 2018/2019 2019/2020 2020/2021

GD 1 & 2 13,400,000 24,153,000 15,325,957 1,336,400 54,215,357

GD3 3,516,687 3,624,437 10,368,876 17,510,000

Combined 13,400,000 24,153,000 15,325,957 4,853,087 3,624,437 10,368,876 71,725,357

Rounded 13,400 24,153 15,326 4,853 3,624 10,369 71,725

9.2.2 The WLEP capital funding from Growth Deal for 2018/19 is £4.853m. Although there has been very little spend to the end of Quarter 2, currently all projects with LGF funding agreed by WLEP board are forecast to fully utilise their LGF funding in 2018/19, therefore there are no year-end variances to report at this stage. This is shown in detail at Table 2.

Table 2 – 2018/19 – 2020/21 LGF Budget, Actual and Forecast

2018/19 Schemes2018/19 Budget (£000)

2018/19 Spend to Qtr 2 (£000)

2018/19 Forecast

(£000)

2019/20 Budget (£000)

2020/21 Budget (£000)

Total Budget

18/19 – 20/21

(£000)

Kidderminster Railway Station 1,098 310 1,098 0 0 1,098

The Kiln 195 0 195 0 0 195Bromsgrove A38 1,000 0 1,000 750 5,750 7,500Pershore Northern Link Improvements 500 64 500 700 3,800 5,000

Churchfields 255 86 255 192 553 1,000Engineering Faculty for the Heart of Worcestershire College

1,805 0 1,805 1,982 222 4,009

Currently unallocated 0 0 0 0 44 44

Total 4,853 460 4,853 3,624 10,369 18,846

9.3 2018/19 WLEP Revenue Budget

9.3.1 The LEP's Core budget for 2018/19 is £662k, comprising:

i) DCLG income of £500k,

ii) Local authority income of £150k, and

iii) Other income of £12k.

9.3.2 Current expenditure levels indicate that the WLEP are operating below the £662k budget. The current forecast is for a £25k underspend position at year-end, due to staffing costs being lower than anticipated at budget setting.

9.3.3 The improvement in forecast from Quarter 1 follows the decision not to replace the vacant post of Research Executive but to "buy-in" this support from the County Council. This has been evaluated to be a more cost effective approach than recruiting to the vacant post.

9.3.4 The £25k underspend that is currently forecast is expected to be transferred to the WLEP reserve at year-end. A revaluation of the redundancy element of the reserve has also been undertaken due to the turnover of staff which has resulted in the need to hold £5k less for redundancies. Table 3 shows the opening balance of WLEP reserves and forecast closing position. The forecast year-end position is a balance of £165k in the WLEP reserve, which also includes the required provision for redundancy costs. There is also a balance expected of £21k in the Apprenticeship Reserve.

Table 3 – WLEP Reserve position

2018/19 Opening Balance(£000)

2018/19 Forecast

Movements(£000)

2018/19 Forecast

Closing Balance (£000)

WLEP General Reserve 140 25 165WLEP Apprenticeship Reserve

21 0 21

Total 161 0 186

9.3.5 Worcestershire County Council, as the Accountable Body for WLEP, includes all transactions undertaken and managed by the WLEP, within the financial ledger and its sub ledgers which are subject to both internal and external review on an annual basis.

9.4 Current position regarding Growing Places Fund

9.4.1 The Board will recall that the Growing Places Fund (GPF) was originally introduced to provide loans to accelerate the delivery of projects that would deliver economic outputs and outcomes. Loans were agreed at market rates based on the risk profile of the project with all capital being repaid over an agreed period.

9.4.2 The original GPF made available to the LEP totalled £5,518,972 of which £418,515 was revenue. The uncommitted balance remaining at the end of the 2017/18 financial year was £9,821 revenue. The amount currently held on the balance sheet is £3.277m however this has been committed to individual projects.

9.4.3 A review of historic commitments from GPF took place in quarter 2, which resulted in £44k being returned to the GPF Project Development Fund, which now stands at a total of £496k. A detailed split per project shown at Appendix 1.

Christopher BirdFinance Manager – Transformation and Development FinanceWorcestershire County Council

Signed off and approved by Stephanie Simcox – Head of Finance within the Accountable Body.

APPENDIX 1 – GROWING PLACES FUND

9. b ESIF PROGRAMME

WLEP BOARD RECOMMENDATIONThe WLEP Board is recommended to:

a) Note the approach to the whole ESIF programme and its performance.

b) Note the programming of funds to potentially 2023 before the UK Shared Prosperity Fund becomes fully established. (The proposed UK Shared Prosperity Fund will be consulted on in the Autumn 2018).

c) Recognise the position of the ESF funding programme. The lack of local match funding hampers local delivery.

d) Note the position of the Rural funds managed by Defra and re-enforce the efforts of the executive to secure further funding from those areas who have not spend their allocation.

9.1. Context

9.1.1. The Board will be aware that European Structural and Investment Funds (ESIF) programme is overseen at a local level by an ESIF Sub Committee. One of the key roles for the Committee is to design and agree calls for proposals to deliver specific aspects of the delivery of Worcestershire’s ESIF Strategy.

9.1.2 The ESIF Committee meet quarterly and this report is an update from their last

meeting on the 19th September 2018. The exchange rate has changed on our allocation therefore providing us with additional resources; equally the project is now likely to run its full length to 2022/23.

9.2 EUROPEAN REGIONAL DEVELOPMENT FUND (ERDF)

9.2.1 The exchange rate on the programme has increased which has therefore increased our funding allocation by £4.2m. This means that Worcestershire is in the following position:

Priority Axis Previous Allocation

Revised Allocation

Additional Funding

Current Allocated &

Spent

Unallocated

PA1 Innovation £4,469,100 £5,175,600 £706,500 £4,112,600 £1,063,000PA2 ICT/Broadband

£1,239,600 £1,435,600 £196,000 £1,435,300 £308,000

PA3 SME Competitiveness

£13,593,100 £15,741,800 £2,148,700 £13,641,800 £2,100,000

PA4 Low Carbon

£6,441,900 £7,460,300 £1,018,400 £5,360,300 £1,300,000

PA6 Environmental Protection

£1,412,900 £1,636,200 £223,000 £1,250,200 £386,000

Total £27,156,600 £31,449,500 £4,292,600 £25,800,200 £5,200,000

*Please note the figure may not balance due to rounding.

9.2.2 Table 2 (attached to this paper) identifies the projects currently contracted, or in the process of being contracted, within the ERDF programme.

9.3 EUROPEAN SOCIAL FUND

9.3.1 The table below provides the current position in respect of financial commitments on the ESF programme. These figures are before the exchange rate re calculation, which we are formally awaiting.

Worcestershire ESF Allocation Profile

Project values (Allocated and Contracted)

Notional Allocation

Remaining Balance to Allocate

PA1.1 Access to Employment by job seekers and inactive

£2,802,000 £12,350,000 £9,548,000

PA1.2 sustainable integration of Young people

£1,971,000 £2,010,00 £39,000

PA1.4 Active Inclusion

£3,320,000 £8,699,000 £5,379,000

PA2.1 Life Long learning

£9,911,000 £22,515,000 £12,604,000

PA2.2 Improving the labour market relevance of education and training systems

£0 £4,718,000 £4,718,000

*Please note the figure may not balance due to rounding.

9.3.2 However, the ESF programme is not performing as well as the ERDF and EAFRD programme. We have allocated less money through calls and opt-ins. Some of our open calls have attracted bids but these have not come through to contract due to failing the value for money measurement by the Managing Authority. We are preparing a call on PA2.2 which will go out in March 2019.

9.3.6 The Executive team have been proactive in working with local partners in an attempt to identify local match, but this has been unsuccessful. We are therefore recommending further discussions with the Managing Authority, Department for Work and Pensions to identify national match to local programmes.

9.4 EUROPEAN AGRICULTURAL FUND FOR RURAL DEVELOPMENT (EAFRD)

9.4.1 Project pipeline current pipeline value of £4.06m with over programming of £2.3m 230% of allocation.

9.4.2 Total approved /contracted £1.4m / 62% (updated from report) Approved/ contracted projects:-

• Valefreso

• Worcestershire Mushrooms

• Broadway Tower Country Park Ltd, Worcestershire

• T I Simpson Windy Bank abattoir

• Lambswick Drinks

• Geometric Manufacturing Ltd

• Pensons Farm Venue Development/ Netherwood

• Clive's Farm Shop and Café

• GR Moule Millridge Farm Cherry Covers

• Chadbury Farm Shop and Café

• Wildgoose Rural Training Growth Project

• C&J Brockie Corran Dean Supported Living

Gary WoodmanChief Executive

Table 2: Project ERDF

European Structural and Investment Funds 2014 - 2020

Growth Programme for England

Worcestershire Project Name and Applicant Value of Projects

Priority Axis Category of Region

Project Name Applicant Status ERDF£

Total£

1 MD Worcestershire Proof Concept Extension Worcestershire County Council (WCC) Full £2,575,157.0 £5,150,314.0

1 MD Worcestershire Proof of Concept Worcestershire County Council LIVE £1,537,394.0 £3,074,788.0

PA1 Total £4,112,551.0 £8,225,102.0

2 MD Worcestershire Superfast Broadband Worcestershire County Council LIVE £1,127,415.0 £2,254,830.0

PA2 Total £1,127,415.0 £2,254,830.0

3 MD Enterprising Worcestershire SME Growth Programme Worcestershire County Council LIVE £604,005.0 £1,208,010.0

3 MD Enterprising Worcestershire Start-Up and High Growth Start-Up Support Programme

Worcestershire County Council LIVE £1,076,648.0 £2,153,296.0

3 MD GrowAgri Worcestershire Warwickshire College t/a WCG LIVE £1,031,310.0 £2,062,620.0

3 MD Investing in Growth Worcestershire County Council LIVE £1,150,000.0 £2,300,000.0

3 MD Manufacturing Growth Programme (MGP) WMMBF Ltd LIVE £500,000.0 £1,000,000.0

3 MD Midlands Engine Investment Fund (PA3) Department for Business, Energy and Industrial Strategy (“BEIS”)

LIVE £5,600,000.0 £18,974,412.0

3 MD SME International Growth Project West Midlands International Trade LLP LIVE £292,083.0 £584,166.0

3 MD Worcestershire Business Central – Growth Hub Herefordshire and Worcestershire Chamber of Commerce

LIVE £472,885.0 £945,771.0

3 MD Worcestershire Growing Cyber 2 Worcestershire County Council LIVE £834,898.0 £1,669,796.0

3 MD Manufacturing Growth Programme II Oxford Innovation Services Ltd Outline £300,000.0 £600,000.0

3 MD Midlands Engine Export Grant Scheme Department for International Trade (DIT) Outline £150,000.0 £300,000.0

3 MD Worcestershire Business Central – Growth Hub ( Phase 2 ) Herefordshire and Worcestershire Chamber of Commerce

Outline £300,000.0 £600,000.0

3 MD Worcestershire SME Growth programme Worcestershire County Council (WCC) Outline £1,280,000.0 £2,560,000.0

PA3 Total £13,591,829.0 £34,958,071.0

4 MD BEEP ( September 2017 ) Worcestershire County Council (WCC) Full £1,114,342.0 £2,306,452.0

4 MD Business Energy Efficiency Programme Worcestershire, Herefordshire and Telford

Worcestershire County Council LIVE £795,847.1 £1,658,040.5

4 MD Target 2020 Severn Wye LIVE £512,640.0 £1,079,316.0

4 MD Worcestershire Low Carbon Business Programme Worcestershire County Council LIVE £1,194,822.0 £2,389,669.0

4 MD Low Carbon Opportunities Programme Extension 2019 - 2022 Worcestershire County Council Outline £1,101,752.0 £2,133,730.0

4 MD Public Sector Energy Programme (PEP) Worcestershire County Council Outline £1,412,685.0 £2,876,000.0

PA4 Total £6,132,088.1 £12,443,207.5

6 MD Love Your River Worcestershire Severn Rivers Trust LIVE £1,249,676.0 £2,723,550.0

PA6 Total £1,249,676.0 £2,723,550.0

More Developed Total £26,213,559.1 £60,604,760.5

Transition Total £0.0 £0.0

Less Developed Total £0.0 £0.0

Grand Total £26,213,559.1 £60,604,760.5

All Values are for ERDF only Exchange rate used: 0.78 Date produced: 10/09/2018 Includes Financial Instruments

1.2.3.4.5.6.7.8.9c UPDATE FROM CHAIR OF THE FAR COMMITTEE – RISK REGISTER

WLEP BOARD RECOMMENDATIONThe WLEP Board is asked to:

Note the work undertaken by FAR Committee in developing and revising WLEP’s Risk Register.

Note the changes to the risk profile following FAR Committee review at their meeting on 5th November 2018.

Have a discussion on the LEP Board’s risk appetite and process for escalating and managing risks as part of wider Risk Management strategy.

9.

9.1. Context

899.19.1.1 As outlined in the WLEP Assurance Framework, the Finance, Audit and Risk (FAR)

Committee operate as a sub-group to the WLEP Board and meet on a quarterly basis. One of the FAR Committee’s key roles is in ensuring that the necessary risk management systems are in place for WLEP operations.

9.1.2 This brief report provides an update on the risk profile for WLEP, following a review of the risk register undertaken at the FAR Committee meeting held on 5 November 2018.

9.2 WLEP Risk Management Principles

9.2.1 The next 12 months will present unprecedented challenges for the LEP, for example, responding to the LEP Review and the recommendation to develop a legal personality for WLEP in its own right; challenges for the private sector due to the ongoing uncertainty around Brexit implications; and challenges for the public and voluntary sector through ongoing reductions in central government funding.

9.2.2 Whilst these changes can create opportunities; they also create significant risks and uncertainty. WLEP has to manage the risks and opportunities associated with the delivery of our SEP and response to the LEP Review, by adopting good risk management principles.

9.2.3 Risk is unavoidable. Successful risk management is about ensuring that we have the correct level of control in place to provide sufficient protection from harm, without stifling our development. WLEP’s overriding attitude to risk is to operate in a culture of creativity and

innovation, in which all key risks are identified in all areas of the business, and that they are understood and proactively managed, rather than avoided.

9.2.4 Risk management therefore needs to be understood and embraced by WLEP and our key partners. Through the FAR Committee, we have the structures and processes in place to ensure the risks and opportunities of daily WLEP activities are identified, assessed and addressed in a standard way. We do not shy away from risk but instead seek to proactively manage it. This approach allows us to not only meet the needs of the local economy today, but to also be prepared to meet future challenges.

9.3 WLEP Risk Register

9.3.1 WLEP has an established Risk Register tool in place which is reviewed regularly by the FAR Committee to ensure risks are being effectively managed. Risks are assessed on a 5 x 5 matrix, which measures the probability and impact of a risk, to generate a score that is assigned one of four coloured ratings – Red, Amber-Red, Amber-Green, or Green.

9.3.2 There are currently 17 risks identified on the WLEP Risk Register and at their meeting on 5 November 2018, the FAR Committee reviewed the risks, the mitigating actions in place and re-assessed their post-mitigation values, which resulted in the following changes to the risk profile:

risks were ‘down-graded’ i.e. a reduction in their probability and/or impact values 5 risks resulted in no change to their overall scores 2 risks were ‘up-graded’ i.e. an increase in their probability and/or impact values

9.3.3 It is important to note that the risk values assessed and recorded on the Risk Register are post-mitigation. As a result of the changes made, the risk profile of the WLEP Risk Register is now:

Green – 3 risks Amber/Green – 10 risks Amber/Red – 4 risks Red – 0 risks

The four highest scoring risks (Amber/Red) are as follows:

(Score of 16/25) – Failure to secure the notional funding previously identified through European Structural and Investment Funds (ESIF) will jeopardise delivery of the Strategic Economic Plan.

(12) – With Worcestershire being one of the smaller LEPs and the development of Combined Authorities elsewhere in the country, any proposed change in geography relating to LEPs by government could lead to adverse impact on WLEP

(12) – A political change in national LEP responsibilities results in a risk of the LEP failing to adapt to, or delivery on priorities, and potentially exacerbating existing risks.

(12) – The capacity of partner organisations to deliver a programme of capital and revenue projects on time, on budget and of sufficient quality in line with EU funding programme guidelines.

For more detail on the risks and the mitigating actions in place, the full Risk Register is included as Appendix 1.

9.4 Risk Management Strategy and Risk Appetite

9.4.1 It is important to recognise that not all risks can be managed all of the time, due to external factors being outside the control or influence of WLEP.

9.4.2 The FAR Committee are keen to re-check WLEP Board’s risk appetite, to understand where WLEP Board is prepared to accept risk. The current working assumption is that risk management is delegated to FAR Committee to manage but any risk that is assessed as a ‘net red’ risk must be a priority for immediate management action and should be escalated to WLEP Board for information and decision as appropriate. A decision would then need to be taken whether to avoid, transfer or reduce the risk (recognising a ‘net red’ risk cannot be accepted).

9.4.3 As there are no red risks currently, the FAR Committee are providing this report as an information update and propose to provide similar updates to WLEP Board on a quarterly basis unless any risks are assessed as ‘net red’.

Luke WillettsDirector of Operations

10.11.12.13.14.15.16.17.9d UPDATE FROM CHAIR OF THE FAR COMMITTEE – OTHER UPDATES

WLEP BOARD RECOMMENDATIONThe WLEP Board is asked to:

Note the work undertaken by FAR Committee in commissioning an internal audit of WLEP’s Local Assurance Framework.

1.2.3.4.5.6.7.8.9. Context101111.1

9.1.1. As outlined in the WLEP Assurance Framework, the Finance, Audit and Risk (FAR) Committee operate as a sub-group to the WLEP Board and meet on a quarterly basis. One of the FAR Committee’s key roles is in ensuring a regular, timely and robust process of audit activity.

9.1.2. This brief report provides an update on the internal audit exercise commissioned by the FAR Committee on behalf of WLEP which is focused on the application of our updated Local Assurance Framework, which was adopted in February 2018.

9.1.3. The audit was commissioned via the Accountable Body as a benefit in kind, and therefore WLEP has incurred no additional costs for its undertaking. It will be undertaken by

Warwickshire County Council’s Internal Audit Services on behalf of Worcestershire County Council.

9.2. Audit Terms of Reference

9.2.1. WLEP adopted an updated Local Assurance Framework in February 2018. At the FAR Committee meeting on 24 April 2018, it was agreed that an audit should be undertaken to provide an independent assessment on the design and application of this framework.

9.2.2. The audit will assess the extent to which the WLEP governance structures as designed and documented in the WLEP Assurance Framework meet the LEP National Assurance Framework 2016 (informed by the LEP governance and transparency best practice guidance 2018). It will also examine on a sample basis the application of the framework in practice.

9.2.3. The review will follow the following key lines of enquiry: Governance and decision making Transparent decision making Accountable decision making Ensuring value for money in the following areas:

o Options appraisal and prioritisationo Value for Money and Business Caseso Monitoring and Evaluation

9.3. Emerging Findings

9.3.1. The audit has been comprised of a desktop review of the WLEP Assurance Framework to test compliance with national guidance, and was followed by sample testing to assess compliance with the new framework in practice. Testing is limited to the period during 2018 since the new framework was implemented i.e. February 2018 onwards. A total of 10 days has been allocated to the audit to include an element of planning, fact finding, audit testing, quality review and reporting.

9.3.2. Emerging findings reported to FAR Committee on 5 November 2018 can be summarised as follows:

WLEP Assurance Framework document is compliant with national guidance and best practice

Application of the framework is broadly compliant but couple of issues with some sub-group papers not being on website in line with Assurance Framework e.g. Business Board and LEP Quad

Risk Register tool in place however what is position of WLEP Board in terms of its risk appetite to ensure making best use of the process

Cross-LEP working – request for any evidence of protocol arrangements for collaboration with neighbouring LEPs i.e. GBSLEP

9.4. Timeline

9.4.1. The overarching timetable for the audit is outlined below:

Terms of Reference agreed by FAR Committee – 1 Aug 2018 Audit fieldwork – 17 September to 28 September 2018 Draft findings presented to FAR Committee – 5 November 2018 Final report circulated to WLEP – Early December 2018 Development of Action Plan and implementation – December 2018 Review of action plan implementation at FAR Committee – 28 January 2019

Final report from FAR Committee to WLEP Board – 21 March 2019

9.4.2. On receipt of the final audit report, in early December, WLEP will develop an action plan to address the recommendations. This action plan will be monitored by the FAR Committee with progress reports provided to WLEP Board following implementation.

Luke WillettsDirector of Operations

1.2.3.4.5.6.7.8.9.

78910 BETADEN PROGRESS – WLEP November Board Update

WLEP BOARDWLEP Board is recommended to

a) Note that this report is in line with the Quarterly Performance measurement requirement for BetaDen and to consider and approve release of Q4 funding.

b) Note the progress to date and continue to receive further reports on BetaDen at each WLEP Board with a forwards and backwards looking perspective to include activity, KPIs and funding allocations.

7.8.9.10.10.1. Background

10.1.1. BetaDen is the umbrella branding for WLEP’s Centre for Entrepreneurship. BetaDen provides flexible work space, initially at Malvern Hills Science Park, in a fully supportive environment that allows for creative and connected development for entrepreneurs and start-up companies working in emerging and disruptive technology.

10.1.2. BetaDen will create a pipeline offer to attract graduates, entrepreneurs and off-site R&D pods for primes looking at spin-out or off-site development space. The post-launch phase of development is about making the Malvern Hills Science Park location a suitable environment for tech entrepreneurs.

7891010.110.1.3 The business case and budget profile was approved by the WLEP Board in September

2018, and this progress report is designed to provide details on progress, request continuing support from the Board and approval for the Q4 Budget Profile and includes a forward look at the programme and forecast spend.

10.2. Progress Report

7891010.210.2.1 October Start for Cohort 1

The pilot programme started on Tuesday 2nd October with a five-week introductory workshop programme across the subject expert specialisms (mentors). BetaDen has seven members in this first pilot cohort. This has been well received and has allowed relationships to start to develop and matched to specific needs of the accelerator businesses. Preparation for Proof of Concept ERDF funding is also being supported in the form of workshops and individual coaching. Details on members of cohort 1 are available on www.beta-den.com

The seven entrepreneurs are working on emerging tech concepts as listed below; four of which have direct links to 5G* applications development.

Worcester Scientific Ltd Sidaway Tech* Orth Oracle Ltd

Shedeo Productions Syndial* Titania AI Ltd* GBR14 Ltd*

10.2.2 Mentor/Coaches for BetaDen There are six contracted mentors in place delivering support between October and December. These have been procured under the normal WCC procurement process. Contracting for January until end of cohort 1 (May 2019) will be under ERDF engagement rules and offered from early December.

10.2.3 BetaDen Stakeholder Development The first stakeholder event was well attended at the end of September. Development with strategic organisations and individuals to support the BetaDen vision for Worcestershire continues and includes the following:

Coventry University confirmed as Academic Partner for BetaDen CGI (Corporate Canadian Technology Company) have expressed an interest in a

brokerage partnership for Worcestershire tech SME’s to have opportunities to showcase innovative solutions and potential contract supply.

10.2.4 PR/Marketing/Events Supporting BetaDen Development BetaDen will continue to run social and main media campaigns in support of brand awareness and cohort profile. An Autumn PR schedule of events and campaigns are planned and being delivered for quarter 3 and 4. Further website and cohort portal content development is included in this programme of work. The marketing plan has been approved by the Advisory Board in line with Quarterly KPIs.

10.2.5 Licence Agreements between Accountable Body and BetaDen cohort Working with the Accountable Body, Place Partnership and Malvern Hills Science Park, legal agreements in the form of licences are in place for the seven cohort members for the agreed time period for Cohort 1 (2nd October 2018 - 23rd May 2019). This includes the required due diligence to ensure a clear legal framework is in place for the companies and individuals to operate in the WLEP office.

10.2.6 Non-Disclosure Agreement (NDA) Between BetaDen Cohort & Mentors A standard WCC NDA Template has been adopted and used for the purposes of sharing information whilst maintaining commercial confidentiality.

10.2.7 Commercial Development of BetaDen A piece of consultancy work has been commissioned by WLEP to scope the next stage of commercial development required for future growth and sustainability of BetaDen as a commercial entity. This will be completed by the end of the year as planned in line with the Q4 KPI.

10.3. Finance

10.310.3.1 The overall project profile for BetaDen has been developed and is available on the secure

website.

10.3.2 As an update, the set-up costs are lower than previously forecast, and where possible efficiencies have been found through cohabitation with 5G and WLEP in the office space in Malvern. This has led to reduced Q2 and Q3 set-up costs, which are detailed in the figures below, along with re-profiling of some expenditure into Q3. Ongoing running costs from Q4 onwards are forecast to be the same as previously reported.

10.3.3 The quarterly gateway funding submission for BetaDen from the £500k Growing Places Fund for 2018/19 is:

Quarter 1 (April – June 2018) - £48,442 – confirmed spend Quarter 2 (July – Sept 2018) - £3,788 – confirmed spend Quarter 3 (October – December 2018) - £74,473 - projected Quarter 4 (January – March 2019) - £118,478 - projected Annual Total - £245,181 – projected

10.3.4 At the September WLEP Board, the forecast for Q2 and Q3 combined was £102,837. The combined Q2 actuals and Q3 forecast is £78,261, giving a reduction of £24,576. With Q1 actuals and Q4 forecast remaining consistent with plan the projected annual total has also decreased by £24,576 to £245,181.

10.3.5 WLEP Board has previously approved £102,837 across Q2 and Q3, and is asked to note that current projections for this period are lower than the approved amount. The WLEP Board is also asked to give formal approval for £118,479 for Q4. The forecast for Q4 is noticeably higher than the other quarters due to £105k is expected to be allocated as grant payments to Entrepreneurs in February.

10.3.6 A Q3 review will be reported to WLEP Board in January 2019 along with the request for funding for Q1 2019/20. A BetaDen annual report outlining financial, operational and KPI performance against plan for 2018/19 and the plan for 2019/20 will be submitted to WLEP Board for its March/April 2019 meeting.

10.3.7 Access to ERDF funding will be used to offer Proof of Concept funding to the BetaDen cohort, subject to eligibility, and is seen as important to attracting interest in the wider BetaDen offer. The work is underway to formally submit an application for ERDF funding in line with the ERDF programme timescales, which if successful, would see this funding become available for BetaDen project expenditure in January 2019, as per the BetaDen financial forecast model.

10.3.8 The WLEP core budget also contributes c£98k per annum to the BetaDen project for staffing costs and a contribution of £57k is being received from the 5G project in this financial year for office accommodation.

10.210.310.4 Success Milestones / KPI’s

10.4.3 As previously reported, a number of success milestones and KPIs have been developed for this project for each quarter of 2018/19 and an indicative plan for 2019/20. WLEP Board is to receive formal updates on a quarterly basis as contained in this report.

10.5 Project Governance

10.5.3 A BetaDen Advisory Board has now been established, with meetings being held monthly frequency February 2018. It is chaired by Nick Baldwin and will continue to monitor performance of the project and act as the escalation point for key risks and issues. Meetings are currently planned to the end of the financial year (March 2019)

Linda SmithDirector of Enterprise

11. HoW COLLEGE – NEW ENGINEERING FACULTY (GROWTH DEAL 3)

WLEP BOARD RECOMMENDATIONThe WLEP Board is asked to:

Approve £4.009m LGF allocation for the project to be matched 50/50 by HoW College

Initiate WLEP Executive and Accountable Body to draft the Funding Agreement for Phase 1 of the project enabling expenditure to be defrayed in line with LGF profile to a maximum of £2.1m

Note that HoW College will develop the Phase 2 project proposal and costing for submission to WLEP Board during 2019 and a separate funding agreement will be sought for the remaining WLEP funding

11.1. Context

11.1.1. The HoW College New Engineering Faculty project involves the development of a multi-site Engineering Skills Centre specialising in the delivery of Automotive, Plumbing and Heating engineering skills. The new Centre will be split across a newly acquired site and existing HoW College buildings on the Worcester city campus, which will require refurbishment and modification.

11.1.2. The HoW College New Engineering Faculty project was originally earmarked for approval by WLEP Board on 20 March 2017, subject to further project development work in line with the WLEP Assurance Framework, following successful award of Growth Deal 3 (GD3) monies to WLEP from central government.

11.1.3. This paper provides an update on the development of the project proposal for a new HoW Engineering Faculty.

11.2. Growth Deal 3 Award

11.2.1. In the summer of 2016, central government announced its intention to distribute £1.8bn of Growth Deal Round 3 funding through a competitive process. The funding profile was to be back-end loaded with 50% of the budget being available in 2020/21 and none of the funding being available beyond this point.

11.2.2. Our WLEP Local Growth Fund 3 submission outlined nine projects, spanning the three Strategic Economic Plan (SEP) ‘pillars’ of infrastructure, skills, and business support. Each of these projects was in strategic alignment with the WLEP vision to improve economic growth, productivity and create housing, as outlined in our SEP.

11.2.3. Following the announcement of the Midlands Engine Strategy in March 2017, each LEP within the Midlands Engine area, received formal notification of its Growth Deal 3 allocation for 2017/2018 – 2020/2021.

11.2.4. In WLEP’s case, £17.51m GD3 funding for four (of our nine included in the submission) projects was confirmed. These were:

A38, Bromsgrove - £7.5m Pershore Northern Link Road - £5m Engineering Faculty @ Heart of Worcestershire College - £4.01m Churchfields, Kidderminster - £1m

11.2.5. As a result of the GD3 profiles provided by central government, this effectively meant that no Growth Deal funding would be available for WLEP’s GD3 projects until 2018/19.

11.2.6. It was agreed at WLEP Board meeting in March 2017 that each of the above schemes would be progressed through the formal application and approval process identified in the WLEP Assurance Framework.

11.2.7. A full Growth Deal application form has now been completed and submitted by HoW College for this project, in line with the WLEP Assurance Framework. This application has been appraised by WLEP and the Accountable Body who are recommending the project for approval by WLEP Board.

11.3. Project Overview

11.3.1. The aim of the project is to establish training facilities in the key priority areas of Engineering and Construction that will equip young people and current workers with the skills and knowledge to support Worcestershire to address the skills gap at level 3 and above.

11.3.2. This will be achieved by developing a new facility to house Automotive Engineering and Plumbing and Heating Engineering that will enable Heart of Worcestershire College to offer full time, apprenticeship and commercial courses to support local students and employers to develop a highly skilled workforce that meets the skills requirements for the immediate and near future. In addition the refurbishment and re-design of current facilities within the Worcester Campus will allow HoW College to modernise the current curriculum offer and through working with employer partners develop new programmes that will train Engineers to a skill level to benefit local industry.

11.3.3. The project encompasses 2 phases and will be delivered across several sites within Heart of Worcestershire College. Phase 1 will be the purchase and fit-out of a new Automotive Engineering and Plumbing and Heating Centre (Site A) in Midland Road, Worcester. This aligns strategically with the WLEPs emerging construction skills strategy led by the WLEP Employment and Skills Board sub group.

11.3.4. In addition, the aim through phase 2 is to create a Centre of Excellence in Engineering and Advanced Manufacturing, which is one of the key sectors identified in WLEP’s Strategic Economic Plan (SEP) published in March 2014.

11.3.5. This will be achieved through the refurbishment of HoW College’s Cathedral Building (Site B), St Andrews Building (Site C) and All Saint’s (Site D). Development of these sites will enable Heart of Worcestershire College to address the reported lack of local workplace-ready skills and the future supply of highly skilled labour – due to an ageing population and out-migration of younger cohorts. The estimated labour demand in Worcestershire is around 12,800 people in 2018 and is projected to rise further to 13,150 by 2022.1

11.4. Strategic Alignment

11.4.1. This project addresses a number of the strategic opportunities and challenges referenced in the SEP:

Opportunity 1: Key sectors of national significance

1 Source: CITB Construction skills gap analysis for the Worcestershire area

Opportunity 4: Inward investment growth potential Opportunity 6: Enterprise creation and growth potential Challenge 4: Labour supply/demographic challenge Challenge 6: Skills

11.4.2. As a result of this project, HoW college will be enabled to provide individuals with high quality skills through investment in new, industry standard equipment and technology to train engineers for the future. The equipment purchased will be aligned to new Apprenticeship Standards, T-Level development and industrial / commercial updating on new technologies. The development of a new Automotive Engineering Skills Centre, which will also incorporate plumbing and heating engineering skills delivery, will support the LEP to achieve its target of a 20% increase in 16-24 level 3 STEM qualifications.

11.4.3. The Centre will also provide the facilities and equipment required to deliver the new Motor Vehicle Service and Maintenance Advanced Apprenticeship Standard supporting the Skills for Growth objective within the SEP.

11.4.4. The project is also closely aligned to addressing The Construction Skills Gap Analysis for the Worcestershire Area and the skills provision required by the Construction Sector over the next 5 years. HoW College are the main training provider delivering training to the Worcestershire LEP (34.9%) and also the main provider of Apprenticeships (21.4%).

11.4.5. The incorporation of Plumbing and Heating Engineering within the new build will support Worcestershire LEP in addressing the current labour demand in the area of plumbing and heating, ventilation, and air conditioning trades which currently has a demand for 850 people. This is third in the list of labour demand occupations behind wood occupations and electrical trades and installation (which is also addressed through refurbishment of site B and development of site D).

11.4.6. Within the CITB Construction Skills gap analysis for the Worcestershire Area it indicates that the top 3 skilled trades required for new projects are wood trades and interior fit out, electrical trades and installation and plumbing and heating.

11.4.7. Ten main providers deliver 90% of the training provision with in Worcestershire, so to meet this demand, capacity of the current providers must be increased. HoW College, alongside the CITB are already the largest provider of Construction Apprenticeships within the Worcestershire LEP area, so to increase starts within Plumbing and Heating Engineering further space is required.

11.4.8. The total volume of training provision in the Worcestershire LEP has significantly reduced over the four years from 2012/13 to 2015/16, with the number of new starters decreasing by 40% over this period. However, the number of new starters on apprenticeships has actually increased by 11% over the same period. This indicates a smaller number of training providers are operating in the area, but with increased numbers accessing training. This supports the need for further capacity within HoW College to cope with the demand for Apprenticeships.

11.4.9. Currently HoW College are the top provider of training within the Worcestershire area delivering 34.9% of the total qualifications delivered. To grow the College further and support the LEP meeting the demand for level 3 skills further investment is needed in to space and resources. This can be achieved through the support of the LEP for this 2 stage project.

11.4.10. The refurbishment of the Cathedral Building will enable Heart of Worcestershire College to develop Higher Apprenticeships in Engineering and modifications to the St Andrew’s building will also support investment in 3D printing equipment with the launch of qualifications in 3D Prototyping and Concept Modelling. Through development of the All

Saint’s (site D) there will be opportunity for HoW College to develop an Achievement Measure 2 (AM2)2 test centre to support end point assessment of Electrical Installation Apprenticeships, where there is currently a minimum of 2 months waiting list for an examination place.

11.5. Partnership Working

11.5.1. As part of the development of this project, Heart of Worcestershire College have been and will continue to work in partnership with a range of employers from the engineering sector who are keen to shape education for the future and to ensure training is available to support the development of outstanding engineers.

11.5.2. Currently, HoW College are part of the Worcestershire Technical Skills Partnership initiative working with Worcester Sixth Form College, WLEP, Worcestershire County Council, Worcester Bosch, Mazak, Malvern Panalytic and Morgan to review and re-shape engineering provision at intermediate and advanced levels to align qualifications delivered at College with the skills and behaviours required by local industry.

11.5.3. The Chartered Institute of Plumbing and Heating Engineering (CIPHE) are also working with HoW College and a range of Industry Associates to design a future proofed Plumbing and Heating Engineering Centre that meets the needs and demands of the new T-Levels and Apprenticeship Standards whilst also providing up-skilling for current plumbing and heating engineers.

11.5.4. RYSE 3D are supporting Heart Of Worcestershire College to develop programmes in 3D prototyping and concept modelling with the aim of writing an Apprenticeship Standard for this area of Engineering for delivery in 2019. ARRK Engineering are working with HoW College to develop high performance software engineering within the curriculum and understand how we can best use our new CNC machines in conjunction with 3D printers purchased through this second phase of funding to be used by students within their programmes and used by employers commercially.

11.6. Financial Overview

11.6.1. The project has been developed on the assumption it will be funded on a 50/50 basis, with LGF investment from WLEP matched by HoW College investment from its own funds, with an overall projected spend of £8.018m.

The proposed project expenditure profile is as follows:

Funding Source FY0 FY1 FY2 Totals

2018/19 2019/20 2020/21

WLEP LGF Funding £1,805,000 £1,982,000 £222,000 £4,009,000

HoW College Funding £1,805,000 £1,982,000 £222,000 £4,009,000

Total £3,610,000 £3,964,000 £444,000 £8,018,000

2 The AM2 is a practical assessment with 5 sections (including a short online component), taken over a total of 16.5 hours; it requires candidates to perform a set of common occupational tasks and procedures that a fully qualified electrician might face when working in commercial or industrial premises, as well as dwellings.

11.6.2. This is an extensive programme and as such will be broken down into two phases as outlined earlier in this report.

11.6.3. Phase 1 costs will cover the purchase and fit-out of a newly built unit on the Fortis Business Park. This site is adjacent to the Fortis headquarters at Progress House, Midland Road, Worcester. The College would then appoint a contractor to complete and adapt internal works to the unit, turning the building into a specialist education centre. The majority of these costs will be building adaptations by the main contractor however, professional fees will be incurred for the design and planning aspects of the project and equipment costs for some curriculum areas.

Phase 1 costs are outlined in the table below:

Leasehold Purchase £1,700,000

Conversion / fit out M&E services £750,000

Main contract £1,200,000

Substation upgrade £70,000

Professional fees Design, QS, M&E, CDM, building control

£235,000

Planning, legal, VAT £50,000

Equipment £250,000

VAT £107,000

Total cost Phase 1 £4,362,000

11.6.4. Phase 2 costs would in the main cover the modification and refurbishment of sites B, C and D and building contractor costs for the project. Professional fees will be incurred for the design, planning and management of this project; a further amount would finally be incurred for equipment costs.

11.6.5. Detailed costing for Phase 2 will be developed during 2019/20 by HoW College and submitted to WLEP and Accountable Body for appraisal before a decision by WLEP Board in 2019/20.

11.6.6. Once project funding has ceased the Engineering Skills Centre of Excellence operations will be maintained through HoW College’s current capital investment programme. Despite the challenges and constraints on funding HoW College has year on year invested in its estate and facilities to make sure the high quality facilities and resources are maintained.

11.7. Project Outputs

11.7.1. As a result of investment in this project, apprenticeship numbers at HoW will increase significantly from 40 new starts to 48-55 per annum as the funding will support introduction of advanced apprenticeship standards in plumbing and heating, automotive and engineering. HoW College will also be equipped with the resources to support writing

of their own Apprenticeship Standard in 3D design and prototyping. The writing of this standard would increase productivity of industry locally and also nationally.

11.7.2. The following table provides an overview of projected project outputs as a result of investment, at a glance:

Output Category Units / Volume

New build training / learning floor space 1,393 sq. Metres (Site A)

Refurbished training / learning facilities 14,602 sq. Metres (across Sites B, C and D)

Apprenticeship Starts: increased over next 3 academic years

12 x Automotive

8 – 17 x Engineering

10 x Plumbing

Level 2 / Level 3 Starts: increased over next 3 academic years

32 full time

Higher Education Starts: increased over next 3 academic years

6 – 12

Commercial/Full Cost Courses: increased over next 3 academic years

40 x Plumbing

18 x Automotive

12 x Electrical Installation

11.7.3. The engineering facility will support HoW College to grow further and provide an increased number of places on programmes to support Worcestershire LEP in providing increased numbers of skilled workers to meet local demand.

11.7.4. Phase 1 will support HoW College in offering the following programmes:

Apprenticeship Standards in Motor Vehicle Maintenance and Service Technician Commercial courses in hybrid technology, electric/hybrid hazard management, air

conditioning New and emerging technologies - for example relating to water treatment, water and

energy conservation/ efficiency. Systems awareness and design insights - such as water safety plans and management,

siphonic rainwater drainage, rainwater harvesting/greywater reclaim,  solar thermal, Heat Interface Units and softened water systems

Alternative plumbing materials such as HDPE, Stainless Steel and cast iron.

11.7.5. Phase 2 will support new programmes to be added to the current curriculum:

Engineering Project Design

3D Prototyping Concept Modelling AM2 testing centre

11.7.6. This project will be in-line with the recommendations of government’s T-Level reform programme. The reforms will support young people and adults to secure sustained, skilled employment. This will only be a success if government, business and the education and training sectors work together in partnership to design and implement these reforms.

11.7.7. Apprenticeships and T-Levels will be based on the same set of standards designed by employers. T-level programmes are substantial and will be high quality and equivalent in size to a 3 A-Level programme and will have more teaching built in to enable students to acquire more and better knowledge, skills and behaviours. The full T-Level route for Engineering and Manufacturing will launch in 2021. This project is vital in supporting Heart of Worcestershire College to develop the facilities and equipment required to meet the standards set by the T-Level reforms.

11.8. Next Steps

11.8.1. HoW College have developed a comprehensive delivery plan for the project and work is already underway utilising HoW College funds. A procurement strategy, design team and project management methodology are all in place, including a comprehensive risks and issues log.

11.8.2. WLEP Board is recommended to approve the project, and authorise WLEP Executive Team and the Accountable Body to develop a funding agreement for their 50% element of Phase 1 (£2.1m) of the project, enabling LGF expenditure to be defrayed in line with GD3 allocation and spend profile.

11.8.3. Further development and cost appraisal for Phase 2 of the project will be undertaken in 2019/20, in line with the WLEP Assurance Framework. Once complete, it will come back to WLEP Board for decision prior to release of Phase 2 funding.

Luke WillettsDirector of Operations

10.11.12. WORCESTERSHIRE ENERGY STRATEGY

WLEP BOARD RECOMMENDATIONThe WLEP Board is asked to: Note the work undertaken to date in developing Worcestershire’s energy

strategy. Delegate authority to the Steering Group, to oversee a stakeholder

engagement exercise during Nov / Dec 2018 on the proposed final draft of the energy strategy.

Agree to revised timeline to finalise energy strategy by WLEP Board, which involves BEIS sign-off by end of calendar year and WLEP Board approval in January.

12.1. Background

1212.1

12.1.1 Worcestershire LEP needs to prepare for a changing energy system, as the UK shifts towards a lower carbon energy mix and local energy generation contributions are required to increase.

12.1.2 The Department for Business, Energy and Industrial Strategy (BEIS) have awarded funding to each LEP to produce their own Energy Strategy to identify local opportunities and challenges. WLEP have been awarded £40k by BEIS to develop its strategy.

12.1.3 Encraft and Sustainability West Midlands (SWM) have been commissioned by Worcestershire Local Enterprise Partnership (WLEP) to produce an Energy Strategy and implementation plan for the county.

12.1.4 WLEP Board received a report in September 2018 which provided an update on the development of a robust evidence base to inform and support our strategy as well as emerging priorities following the stakeholder workshops sessions held during summer 2018.

12.1.5 Our Energy Strategy will also need to identify a pipeline of projects for inclusion within our Local Industrial Strategy, as part of our response to the Clean Growth grand challenge referenced within government’s Industrial Strategy.

12.2. Progress on Development of Energy Strategy

12.2.1. Following the stakeholder workshop events which took place in the summer, Encraft embarked on developing a first draft of the strategy in September, to set out how things

might change up to 2030, utilising scenario modelling for future energy scenarios produced by the National Grid.

12.2.2. An initial version was presented to the Steering Group at the end of September 2018, and whilst the evidence base is sound, the consensus from the group was that the strategy didn’t provide a compelling case for investment and came across as too generic from a place-based perspective. There was also a lack of reference to Worcestershire’s key sectors, as identified in our SEP, and the project pipeline was under-developed.

12.2.3. Following the feedback provided to Encraft, a review of Energy Strategies from other LEP geographies has been undertaken, with an increased number now published in the public domain than when WLEP commenced our own strategy. Reviewing these has helped us to further inform Encraft about our requirements for the next iteration of the strategy.

12.2.4. The key areas that we have asked Encraft to address in the next iteration are as follows:

Restructure the strategy so that main body is aspirational, inspiring and provides a compelling case to support investment – initial draft was led by evidence base

Provide a greater emphasis on the significant changes that are required for how energy will be generated and used in the county to support growth ambitions – a call to action.

Increase the use of case studies – both within and outside the county – to help inform and raise awareness of the opportunities available

Needs to provide an increased focus around transport agenda

12.2.5. Subject to Steering Group approval of this revised draft, WLEP will then undertake a final round of stakeholder engagement, specifically targeting those partners / stakeholders involved earlier in the process, before we seek final approval from BEIS and WLEP Board.

Our proposed final strategy and pipeline will be structured around the following key priorities:

Affordable energy Clean Economic growth Infrastructure and development e.g. grid capacity, efficient homes, commercial

development Clean Transport – also to include active travel

12.3. Regional Energy Hubs – additional capacity and expertise

12.212.312.3.112.3.212.3.312.3.412.3.5

12.3.6 As referenced in the September report to Board, WLEP is included in the East/West Midlands Regional Energy Hub, which is based in Nottinghamshire and covers 9 existing LEP areas; Black Country LEP, Coventry and Warwickshire LEP, D2N2 LEP, Greater Birmingham and Solihull LEP, Greater Lincolnshire LEP, Leicester and Leicestershire LEP, Marches LEP, Stoke and Staffordshire LEP and Worcestershire LEP. The Regional Energy Hubs will provide technical expertise, capacity and support to WLEP with our energy projects.

12.3.7 Alex Pearson has now been appointed as the Senior Regional Energy Projects Officer for the WLEP area and is now operating out of our office in Malvern on a weekly basis. Alex is familiar with the local area (both professionally and personally as a resident of Worcestershire) and is already engaged in supporting development of our strategy and project pipeline utilising his own experience, skills and knowledge as well as that available across the Regional Energy Hub.

12.4. Next Steps

12.4.1. Unfortunately, it was not possible to bring a proposed final draft of the energy strategy to LEP Board for sign-off at this meeting, as originally intended, due to the revisions required.

8910111212.112.212.312.412.4.1

12.4.2 As part of the funding arrangements for the energy strategy, BEIS are keen to sign-off a LEP’s energy strategy before it is then endorsed by the LEP Board. BEIS are committed to seeking sign-off from all LEPs on their energy strategies by the end of the calendar year. Therefore, the revised timeline for the development of the WLEP Energy Strategy is set out below, subject to LEP Board approval:

End of November – Encraft produce proposed final strategy and project pipeline

December – Stakeholder engagement on proposed final draft

December – Energy Strategy submitted to BEIS for sign-off

January – Energy Strategy submitted to LEP Board for approval

January – Energy Strategy launched and implementation commences

12.4.3 As referenced above, the energy strategy project pipeline will inform the development of our Local Industrial Strategy as this is likely to be the route to future funding opportunities via central government.

Luke WillettsDirector of Operations