Agenda item

Enterprise Zone

Decision:

(1) the Council to progress to formal designation of the Enterprise Zone on 1^st April 2017 subject to recommendation 3.

(2) the Council enters into the Memorandum of Understanding (MOU), set out as Appendix 1 of the report, and delegates authority to the Corporate Director (Housing and Regeneration) to sign the MOU

(3) a further report to be brought before the designation of the Enterprise Zone in April 2017 setting out an analysis of the final business plan and any other matters relating to the viability of the proposal

(4) That authority be delegated to the Corporate Director (Housing and Regeneration) in consultation with the Corporate Director (Finance and Operations) and the Portfolio Holder for Finance and Resources to vary the terms of the MOU following completion subject to such variations being agreed with the other Enterprise Zone parties.

Minutes:

Decision

(1) the Council to progress to formal designation of the Enterprise Zone on 1^st April 2017 subject to recommendation 3.

(2) the Council enters into the Memorandum of Understanding (MOU), set out as Appendix 1 of the report, and delegates authority to the Corporate Director (Housing and Regeneration) to sign the MOU

Reason for Decision

To inform Cabinet about the progress made on the Hertfordshire Enviro-Tech Enterprise Zone and to consider the requirement to agree the Memorandum of Understanding that will guide its eventual operation.

Implications

Financial

The immediate financial impact on the Council will largely be officer time in supporting the Enterprise Zone Board and contributing the operational sub-groups. This will be delivered within existing budgets.

If the Enterprise Zone is designated in April 2017 then all the Business rates growth will be retained within the zone and capable of use for infrastructure and other interventions to resolve transport deficiencies in and around Maylands in order to achieve economic growth. Once the infrastructure needs are met then there will be sharing of the retained income for use by the accountable bodies and Hertfordshire Local Enterprise Partnership, which will include Dacorum Borough Council.

Value for Money

Value for Money considerations are set out above.

Risk Implications

A risk assessment is attached as Appendix 2 to the report.

There is a risk that will need to be considered in the context of the St Albans Local Plan which, if stopped following the recent hearing on the meeting of its Duty to Cooperate, may well render the EZ unviable in terms of its ability to deliver the required level of resources for the infrastructure required in the Maylands and East of Hemel Hempstead area. If still an issue this matter will be considered in a further report to Cabinet before designation.

Health & Safety Implications

None applicable

Equalities Implications

No specific equalities impact assessment has been carried out at this point but will be factored into the business plan and actions of the EZ Board.

Corporate Objectives

Ensuring economic growth.

Monitoring Officer/S.151 Officer Comments

Monitoring Officer:

The Enterprise Zone (EZ) will commence on 1 April 2017 unless specific intervention is made by the local authorities, the LEP or the Secretary of State prior to that date.

The Memorandum of Understanding sets out the key objectives and commitments of the parties to work together in setting up and operating the EZ, but does not in itself designate the area which is approved by central government.

The MOU provides the framework for governance and future decision making but does not fetter the Council’s own decision making processes in relation to agreements on key issues such as the use of the proportion of retained rates and borrowing to support investment, which will be subject to agreement between the parties and further internal authorisation.

Under the Enterprise Zone business rate discount scheme, the billing authority is the aid administrator for State Aid purposes and so is responsible for ensuring the rules are met and that the De Minimis allowances are not exceeded (currently 200,000 euro in a three year rolling period)

Further Monitoring Officer comments are contained in the Legal Structure and the Memorandum of Understanding section of the report.

S.151 Officer

The key decision facing the Council is whether the benefits of the transport infrastructure likely to be delivered if the EZ goes ahead outweigh the growth-related additional income the Council is likely to receive if the EZ does not go ahead.

This decision incorporates cash flows over a 25 year time horizon, and is affected by numerous variables over which there is currently much uncertainty, not least the implementation of a new Business Rates Scheme in 2020, on which Government has yet to release any detail.

In partnership with Hertfordshire County Council, St Albans and District Council and the LEP, Dacorum has commissioned specialist financial due diligence in order to inform Members’ decision-making. The report is due for completion in January 2017, and it is recommended that a further report is brought to Members to consider the detailed financial position in February 2017.

The fact that this financial report would come to Members for consideration after the decision on whether to progress with the MoU does not fetter Members’ discretion on the more fundamental decision as to whether to progress with the EZ. The MoU provides for all Accountable Bodies to apply for withdrawal from the EZ partnership, which enables Members to formalise a decision to progress with the EZ after the MoU has been signed.

Advice

M Gaynor explained that DBC has had a successful bid with St Albans District Council (SADC) to enter an enterprise zone for the Maylands area of Hemel Hempstead and East Hemel. Work has been progressing nicely and all accountable bodies were to sign up to a memo of understanding. He suggested that there would be a report back to members around February/March 2017 to analyse the business plan and determine if it’s viable.

The risk related to SADC’s local plan as two thirds of the enterprise zone was within the SADC area. The inspector has found that SADC did not meet their duty to cooperate obligations and therefore it was unclear as to whether or not SADC would be signing the memo of understanding. If there is a significant delay with the SADC plan then the enterprise zone would depend entirely on DBC resources.

J Deane added that the business case would show all costs and benefits for the next 25 years. If SADC were to pull out of the enterprise zone then DBC would still be generating significant business rates.

M Gaynor reassured members that if Cabinet agree for the council to sign the memo of understanding it would be dealt with in a sensitive manner and the viability would be checked.

Councillor Williams felt that Cabinet should support the recommendations and illustrate to the DCLG that DBC are still interested in the enterprise zone regardless of the position of other authorities.

M Gaynor added that DBC needed clarity from SADC regarding their part in the enterprise zone.

Councillor Marshall asked if the start date had to be 1 April 2017.

M Gaynor confirmed that DCLG had indicated the start date based on when the memo of understanding had been signed.

Councillor Marshall asked what would happen if one party withdrew from signing the memo of understanding, would there be any cost implications.

M Gaynor said they could apply to the Secretary of State to withdraw.

J Deane added that it would be tricky if someone pulled out as people would already have been benefiting from the business rates generated.

S Marshall explained that the secretary of state was aware of the situation and LEP would monitor it too. She suggested an update on these issues is brought to Cabinet in the future.

Voting

None.

Supporting documents: