Agenda item

Government Funded Business Investment Schemes Monitoring Report - Q3 2019/20


Martyn Riley (Programme Manager, Business Investment), Matthew Russell (CEO, Russell Distillers Limited) and Paul Carter (Chairman of the Investment Advisory Board) were in attendance for this item.


1.      Mr Smith (Director of Economic Development) introduced the report that summarised the results of Kent County Council’s (KCCs) monitoring returns for the period 1 October 2019 to 31 December 2019, from businesses that had received loans and equity from KCC managed Government funded Business Investment Schemes (BIS), including the Kent and Medway Business Fund (KMBF) scheme and the former Regional Growth Fund (RGF) schemes. Mr Smith informed Members that the report had been set out in a different format to that previously presented to the Committee to provide greater clarity regarding the funds and should Members’ approve the newly adopted formatting, this style would be applied to future reports. Prior to further discussion on the information set out within the report, Mr Smith introduced Mr Matthew Russell, CEO of Russell Distillers, who was a recipient of a loan from the Tiger fund to present his company’s success story as a result of the loan scheme.


2.      Mr Russell presented a series of slides that set out the process, benefit and success of the Copper Rivet Distillery as a result of receiving the Tiger loan as well as the positive impact on neighbouring industries that had secured business through the establishment and growth of the distillery. Mr Russell thanked KCC for supporting Russell Distiller’s vision and for acting as a trusted ambassador throughout the process of the loan.


3.      Mr Dance welcomed Mr Carter who addressed the Committee in his capacity as the Chairman of the Investment Advisory Board. Mr Carter expressed his view regarding the formatting of the report and proposed that it needed to reflect the entirety of the scheme and its context over the last eight years including KCCs lessons learned and its successes. Mr Carter informed the Committee that the Regional Growth Fund (RGF) had been established to facilitate new investment and to address market failure in the provision of bank lending to viable small and medium sized businesses in order to support economic growth in Kent and Medway.  KCC had supplied £60 million in loans to businesses and had received over 50% back. This then meant that the recouped money could be recycled and reinvested into other businesses which were unable to secure loans from Highstreet lenders. Mr Carter complimented the work undertaken by the professionals who sat on the Investment Advisory Board which ensured that the correct businesses received money for the correct purposes. He assured the Committee that all efforts to recoup the money and support those businesses which were perhaps struggling to repay the loan amount, would continue through the work of the Debt Advisory Group. Mr Carter commended the success of the RGF and said that all efforts needed to be made by KCC to retain recovered monies for further investment into Kent and Medway to ensure economic growth.


4.      Mr Whiting (Cabinet Member for Economic Growth) thanked Mr Carter for his comments and assured Members that all efforts would be made to ensure that KCC retained the recovered money and invested it into the Kent and Medway economy.


5.      David Smith (Director of Economic Development), Martyn Riley (Programme Manager, Business Investment), Matthew Russell (CEO, Russell Distillers Limited) and Paul Carter (Chairman of the Investment Advisory Board) responded to comments and questions as follows:


(a)  In response to the administration process of the loan and whether this would deter businesses from applying, Mr Russell said that there was an arduous process to go through in terms of due diligence. However, Mr Russell recognised that as an entrepreneur or business seeking free or cheaper money, it was crucial that the Investment Advisory Board adopted a strict process to ensure that the right people received the money for the right purpose and as a business, Russell Distillers understood that there had to be a hurdle rate to ensure that the intention of the applicant was the right one for Kent and Medway. Mr Russell informed Members that there would be the same level of reporting required within a commercial setting and that through KCC, Russell Distillers were able to make the contacts required to help grow their business in a way that the commercial industry may not have been able to do. In addition, Mr Carter informed Members that the charge for the loan application offered by KCC was the same as the administration fee from the bank and that the full cost recovery was in place to ensure that those who delivered the service and managed a complex range of loans and equity investments, could be paid.


(b)  With regard to the security of assets, property or personal guarantees for KCC investments of over £100,000, Mr Riley informed the Committee that this was put in place to minimise the risk to KCC. In the early stages of the loan scheme KCC proceeded to provide loans without security and as a result of that, a majority of those business failed to repay the loan. Since the launch of the Kent and Medway Business Fund in 2017, all loan agreements were required to have a form of security.


6.    It was RESOLVED that the report be noted.


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