Decision details

21/00001 Kent and Medway Business Fund Extension

Decision Maker: Cabinet Member for Economic Development

Decision status: For Determination

Is Key decision?: Yes

Is subject to call in?: Yes

Purpose:

– Kent County Council is seeking to extend the Kent and Medway Business Fund (KMBF) which is currently due to end on the 31 March 2021, for a further 2 years, until the 31 March 2023. The extended KMBF scheme will offer investments in the form of grants, loans, and equity, financed from recycled equity and loan repayments received from recipients of both the KMBF and the former Regional Growth Fund (RGF) schemes - Expansion East Kent (ExEK), Tiger and Escalate programmes. Investment in the extended KMBF scheme will be subject to the same decision-making structures, procedures, and safeguards that operate under the existing KMBF scheme.

 

Reason for the decision

 

KMBF and the former RGF schemes are administered by KCC via two contracts with the Department for Business, Energy & Industrial Strategy (BEIS). An East Kent contract (original contract end date 31 March 2021) and a West Kent, North Kent, Medway & Thurrock contract (original contract end date 31 March 2023).

 

BEIS have now unilaterally extended the East Kent contract until 31 March 2023 to bring its end date in line with the West Kent, North Kent, Medway & Thurrock contract.

 

When the Key Decision for the Kent and Medway Business Fund (KMBF) was agreed in 2016 (Decision 16/00107), the decision was made to seek approval to spend until the end date of the then East Kent contract – 31 March 2020. Now that the East Kent contract has been extended, KCC are seeking to extend the KMBF scheme until 31 March 2023.

 

Background

BEIS allocated £55 million from the Government’s Regional Growth Fund to KCC between 2011 and 2014. This funded three RGF schemes covering the whole of Kent and Medway and additional local authority areas:

 

        East Kent (Expansion East Kent - £35 million).

        North Kent, Medway, and Thurrock (Tiger - £14.5 million).

        West Kent (Escalate - £5.5 million).

 

These schemes operated from November 2011 to January 2016. For most businesses, loan finance was provided at 0% interest, with a repayment period of between 5 and 7 years.

 

Since January 2017, KCC has used the recycled RGF loan repayments to enable the Kent and Medway Business Fund (KMBF) to provide loans and equity investments ranging between £50,000-£500,000 to eligible businesses across Kent and Medway. Most funding recipients receive 0% interest loans, with a repayment period of up to 5 years. The recycled RGF loan repayments are also used to finance the Kent Life Sciences (KLS) Fund, a sub-programme of the KMBF scheme. This provides equity investments predominantly in the life science sector. Since 2017, KMBF has made the following investments:

 

 

No. of Investments

Value of Investments

KMBF Loans

73

£8,365,449

KMBF Equity (Kent Life Sciences Fund)

10

£4,100,000

Total

83

£12,465,449

 

KMBF Jobs Created FTEs

165

KMBF Jobs Protected FTEs

59

* FTE=Full-Time Equivalents

 

KCC are seeking to operate the extended KMBF scheme in a similar way, offering grants, loans, and equity.

 

Options (other options considered but discarded)

 

KCC could seek to appoint an external third-party to manage the grant and loans (an on-going external equity management arrangement already exists). This option has not been pursued due: a) the value of the contact would require a lengthy procurement exercise; b) this contract would only initially last for a maximum of two years i.e., March 2023; c) it is unclear if these arrangements would offer savings or improved  investment performance.

 

How the proposed decision meets the objectives of ‘Increasing Opportunities, Improving Outcomes: Kent County Council’s Strategic Statement (2015-2020)’

 

The decision supports the outcome “All Kent’s communities benefit from economic growth and lower levels of deprivation” as it will allow KCC to deliver the Kent and Medway Business Fund, which is seeking to deliver business investment, create new jobs and safeguard existing jobs in the Kent area.

 

Decision:

Decision:

 

As Cabinet Member for Economic Development, I agree to:

 

Delegate the authority to the Director of Economic Development to enter into relevant contracts, legal agreements and put appropriate arrangements in place required to implement this decision:

 

  • Allowing Kent, Medway and Thurrock Companies to access grants, loans or equity investments from the Kent and Medway Business Fund (KMBF) until the 31 March 2023.
  • That these grants, loans, and equity investments will be financed from recycled loan and equity repayments previously obtained from companies that received funds via the former RGF and KMBF programmes.
  • These investments shall be subject to the same rules, criteria and management/administrative charges as investments that have been allocated under the existing KMBF scheme.

 

Publication date: 08/02/2021

Date of decision: 08/02/2021

Effective from: 16/02/2021

Accompanying Documents: