David Smith (Director of Economic Development) and Martyn Riley (Programme Manager, Business Investment) were in attendance for this item.
1. Mr Riley introduced the report that set out the results of Kent County Council’s (KCCs) monitoring returns for the period 1 April 2019 to 30 June 2019, from companies that had received loans from the three Regional Growth Fund Programmes: Expansion East Kent, Tiger and Escalate. As previously reported, the schemes were funded through money that had been allocated by Central Government and therefore KCC were subject to the conditions imposed by the Department for Business, Energy and Industrial Strategy (BEIS) in terms of its management.
2. Officers responded to comments and questions as follows:
(a) Mr Riley informed Members that KCC Internal Audit would engage with those companies considered to be involved in fraudulent activities such as the misappropriation of funds.
(b) In response to KCCs management for the repayment of funds, Mr Riley confirmed that KCC had adopted a flexible repayment method to ensure that the maximum amount of loan value was recouped. Mr Riley informed the Committee that the Regional Growth Fund scheme established in 2012 was initially set up to offer loans in the forms of grants. The allocation of loans to companies from KCC provided companies with the opportunity to take out a 0% interest loan, with a repayment period of between five to seven years. The approach adopted by KCC ensured that investment was monitored, repaid and reinvested into the Kent and Medway Business Fund.
(c) Mr Smith informed the Committee that the primary purpose of the scheme was to promote investment and jobs in Kent. The scheme had created and safeguarded 4,500 jobs and Mr Smith commended KCC’s success in its effectiveness to find and invest in companies that demonstrated an ability to grow whilst safeguarding the interest of the Tax payer through the monitoring and legal processes put in place to recover the funds from failed companies.
(d) In response to comments concerning the creation of jobs, Mr Riley confirmed that KCC had not made any further investment against the three Regional Growth Fund programmes for the past four years, therefore the reported figures were reflective of the jobs created from the existing loans. Mr Riley noted that KCC were contractually obliged by the Government to manage the Regional Growth Fund programme and to retain funds for reinvestment. The feedback from Government verified that the approach adopted by KCC had been well received. Mr Smith assured the Committee that the returned money continued to be reinvested into new companies with new jobs, however, the grant and equity investments fell outside the scope of the report to the Committee. Mr Smith agreed to provide an update report to the Committee in due course once the position of the national economy following Brexit had been resolved.
(e) Mr Riley confirmed that the Loan Recovered figure of £248,741 included the recovered funds in the period which had previously been identified as bad debt.
(f) Mr Smith confirmed that a new scheme had been launched which targeted smaller companies and offered loans up to £100k. Mr Smith agreed to reflect on the views of the committee concerning the promotion of the scheme and implement new marketing tools to encourage greater take-up.
3. It was RESOLVED that the report be noted.