Decision details
Report of the Director of Environment and Shared Service - Enterprise Hub
Decision Maker: Cabinet.
Decision status: Recommendations Approved
Is Key decision?: Yes
Is subject to call in?: Yes
Purpose:
To consider the
establishment of an enterprise hub on the first floor terrace of
Maidstone House.
To consider re-affirming the Council’s commitment to
providing a longer term Enterprise Hub solution when the right
building and/or land becomes available and that an established sum
remains in the Capital Programme for this purpose.
Decision:
That:
(a)
expenditure up to the sum as set out in the Exempt Report of the
Director of Environment and Shared Services to establish an
enterprise hub on the first floor terrace of Maidstone House be
agreed;
(b)
delegated authority is given to the Director of Environment and
Shared Services to negotiate changes to the council’s lease
of the Gateway with the landlord, Capital and Regional to enable
the enterprise hub to be delivered;
(c)
delegated authority is given to the Director of Environment and
Shared Services to recommend the appointment of a contractor to the
Head of Finance and Resources, selected via tender, for the
refurbishment works;
(d)
delegated authority is given to the Director of Environment and
Shared Services to make changes to the design, project programme
and budget to ensure the project is delivered on time and within
budget;
(e)
an initial progress report is presented after nine months of
operation and a full review undertaken after 18 months into the
success and progress of the Enterprise Hub; and
(f) the Economic Development Unit in conjunction with the Property & Procurement Manager continues to look for suitable land and/or buildings for longer term Enterprise Hub solutions and subject to the review in (e) above, report back with fully costed options as appropriate.
Reasons for the decision:
The strategic need and demand for
an Enterprise Hub has long been established, being first included
in the 2008 Economic Development Strategy. This was reinforced strongly be research
underpinning the emerging new Economic Development Strategy
2012-2031 and the new Local Plan: The Health of the Maidstone
Economy points again to the impact of the recession having been
particularly severe in Maidstone with business growth below the
Kent and national averages. Business
deaths have outnumbered business births between 2008 and 2011, with
2012 seeing a reversal of this trend.
It was not until 2013 that an opportunity to
finance the hub project arose through Kent County Council’s
Flexible Workspaces Programme Fund
which offered both loan and grant. A
successful first-phase bid was made and as a result £700,000
match funding (against a total project cost of £1.4m) was
allocated in the Capital Programme
following a report to Cabinet on 18 December 2013which was attached as Appendix A to the report of the
Director of Environment and Shared Services. Before the final “approval to spend”
bid could be submitted, KCC withdrew the grant element from the
Programme.
As a result, Maidstone Council looked at both financing the grant shortfall and proceeding with the KCC bid and funding the project in full through the Public Works Loan Board. This process necessitated a review of the business plan by the new Commercial Projects Manager in line with the Council’s tightened investment strategy. It was acknowledged there is a need for an Enterprise Hub, but the perceived level of risk was too significant due to high capital start up costs and potential ongoing revenue liability if it was not successful. It was agreed that the project should be underpinned by a freehold asset to mitigate risk. A bid was also made to the Heritage Lottery Fund – which would have funded the project in full - but this was unsuccessful as the building is not listed and English Heritage prioritised buildings with greater heritage value for the fund. It was therefore decided not to pursue the former Post Office site in King Street (leasehold) which had been the basis of both the KCC and Heritage Lottery bids.
In the above context a report was subsequently presented to the Council’s Corporate Leadership Team in July 2014 with short, medium and long term options for establishing an Enterprise Hub and how they would achieve borough-wide Economic Development outcomes. The report evidenced and concluded that establishing an Enterprise Hub should remain the strategic goal, but there was no immediate prospect of achieving this because:
(a) No Maidstone or KCC asset was suitable; and it would take at least two years to realise and/or could prove financially prohibitive to overcome development constraints, and
(b)
No suitable freehold properties were available
currently.
The report therefore recommended consideration be
given to using the first floor Terrace of Maidstone House as a
“holding” business support centre to establish a
presence for Enterprise in Maidstone with the twin objectives
of:
1.
Addressing the immediate need to maintain and enhance support
to
pre-start and start-up businesses and, identify and target
indigenous businesses with growth potential and those with
skills
needs
critical to improving innovation and competitiveness, and
2. Providing a
venue for events, seminars and workshops in Maidstone
linked
to the tightened and expanded Service Level Agreement with
Kent
Invicta Chamber of Commerce.
A subsequent report presented initial sub division options for the
Terrace including revisiting plans for an Enterprise Hub in the
whole Gateway itself which was attached as Appendix C to the
report. Those options included
£17,488 of new capital expenditure for short term office;
staff and meeting room replacement facilities that would be
displaced from the Terrace, but still using parts of the first
floor of Maidstone House for this purpose.
It was
decided that Option 2 (using just the terrace area) be looked at
further and that the proposed scheme would need to be seen as part
of the wider accommodation work currently being undertaken, but
would be delivered before the break clause in the lease of the
first floor of Maidstone House.
Given
the above a further report was presented to the Corporate
Leadership Team on 5 August, attached as Appendix C to the
report which gave detailed costings for establishing a small enterprise hub on
the terrace and which now forms the basis of the recommendations in
this report.
Views
of the Economic & Commercial Overview & Scrutiny
Committee
At the
request of the Economic & Commercial Overview & Scrutiny
Committee a progress report was presented to members at their 29
September meeting. The committee recognised there is a strong
demand for an Enterprise Hub, and that the council could not wait
for two years for a suitable site to become available
and that the following courses of
action were seen as desirable:
* To first
establish a smaller hub, possibly located at Maidstone House or
the Gateway, in order to
prove the success of the project and attract
more funding;
* If it was not possible to find
accommodation in current council assets,
the possibility of a short
term leasehold property should be considered.
The
Committee also asked to see any final report with recommendations
before a decision was made by Cabinet. As a result the draft of
this report was debated by the committee on 25th
November with members recommending that the Cabinet Member for
Economic and Commercial development:
·
Approves the proposal for an Enterprise Hub
·
Brings an update report to the appropriate committee in six
to
twelve
months after the Enterprise Hub has opened, and
·
Pays particular attention to staffing needs due to the
likelihood of
high
usage of the hub, and also in relation to the existing
workloads of the department.
The
rest of the report detailed establishing an enterprise hub on the
first floor terrace - and how it fits with the overall Office
Accommodation Project. This needs to be seen in the context of a
continuing need for a longer term flagship
project to emphasise and action the Council’s commitment to
stimulating indigenous growth and job creation by increasing start
up and survival rates, safeguarding existing
jobs and helping improve the skills, innovation and competitiveness
of businesses across the Borough particularly in our rural
areas.
The Maidstone Model
The recommendation to establish a small enterprise hub on the
terrace needs to be seen in the context of how it will help improve
the survival rates of new ventures, and
an understanding of the life cycle of businesses and how they can
be directly related to the types of interventions and support
needed.
Most incubators/hubs are not single-purpose: providing support to
start-ups (germination) as well as
mature companies (tenancies). This mixed use model was proposed for
the Post Office to give diversified revenue income streams and
enable the Enterprise Hub to remain flexible: enabling companies to
move from one stage of evolution to another while remaining a
‘customer,’ and provide for anchor
tenancies. This also provides the
flexibility to respond to the market and adapt to
demand.
This flexibility is often not associated with classical types of
incubation (Canterbury Innovation Centre) but needs to be built in
from the start to be able to act as a landlord to some tenants, and
as germinator / incubator / accelerator to others.
This fluid approach is crucial to success along with an in depth understanding of the need (and gaps) in Maidstone in order to:
·
Remove the critical
barriers to business formation, growth and
survival across the
borough
·
Stand the best chance of
success financially (to remove/mitigate
the continuing need for public subsidy), and
·
Achieve the desired
economic outputs and outcomes in line with
both the evolving Maidstone Economic Development Strategy and
the SE LEP Strategy.
This model also provides the catalyst for a joined-up approach to support depending on the life cycle of the business, and bring together delivery partners in one place – both physically and virtually. This would further ensure all partners share responsibility for staffing the hub particularly given the need for long opening hours. As attached at Appendix D to the report.
Supporting work and evidence
The proposal to establish the enterprise
hub is not being made in isolation: there are several initiatives
to support businesses which are also being progressed which
include:
·
Redesign of the locateinmaidstone website with a sectoral approach
and
enhanced emphasis on support for start-ups and indigenous
business
·
Implementation of the new
Economic Development Business
Relationship Management system
·
Improvement of the access to, and content of Start-up
on-line
resources
·
Completion of a detailed mapping of rural businesses and
their
needs
and continuing working with partners to provide rural-based
business
support centres
·
Implementation of an enhanced property search &
matching
module
linked to both the new business Customer Relationship
Management system and new website and capitalising on the
income
generating opportunities this affords
·
Completion of a comprehensive audit of all support and
training
currently available to Maidstone businesses to be incorporated
into
the new
website as a searchable module, and
·
Complete the development of the skills support and
training
database that will be available to Maidstone residents including
an
enhancement to provide for business-to-business and
business-to-
customer apprenticeship; work experience and skills matching
module.
However, there still remains an immediate need for a venue and “shop front” for Enterprise in Maidstone. The Kent Invicta Chamber of Commerce is currently engaging with between 700-800 people each year under the Council’s Service Level Agreement (SLA) to deliver start up and other support in Maidstone. The Enterprise Hub will be the delivery point for all support under this or any future SLA. This will both ensure a co-ordinated “one stop” approach and provide a captive audience for the membership, office networking and seminar facilities of the Hub.
As a direct result of the increasing
numbers of people thinking of starting a business in Maidstone,
Kent County Council provided additional grant funds to double
Maidstone Council’s spend on start up support during 2013/14
from the Regional Growth Fund.
Maidstone has also seen a 30% increase in
people working from home over the past 10 years. This is a national
trend, with Maidstone having one of the highest concentrations of
home-based businesses in the country. Statistics from the 2011
Census states there are 9,000 people working from home in
Maidstone, with more than half (5,000) being trading businesses.
Government and national surveys state these businesses too often
work in isolation and lack access to professional equipment;
meeting facilities and invaluable peer-to-peer networking. The
enterprise hub will address these issues and provide the framework
for setting up local business points in rural areas. Given this, talks have been held with the Centre for Micro
Businesses which has developed an expertise in reaching under the
radar home-based micro and rural businesses.
In addition there is the latent
demand to be generated by the Council’s Get in Touch, Get
Advice Get Started campaign launching in December. This campaign – giving One number; One email and One website
for start up support - will target our most disadvantaged wards.
Research suggests many of the country’s most disadvantaged
young people have innate entrepreneurial skills and abilities: self
employment offers many a credible pathway out of the benefit
trap.
An enterprise hub on the first
floor Terrace would be a serious statement of the Council’s
intent and demonstrate that it is both “open for
business” and has a true understanding of what is needed to
support and grow businesses and how it can be delivered in the
short term while a longer term solution can be assessed.
National workhub expert Tim Dwelly confirmed that this approach could work as a precursor to a larger Enterprise Hub if fitted out/ branded correctly and it does not look and feel like an office block. He recommends investment in proper branding, facilities and atmosphere, concentrating on the quality of furniture and lighting.
The Facility
The enterprise hub would be created by a complete refit of the first floor terrace as illustrated on the Architect’s indicative layout and overview as set out in Appendix E to the report.Total development costs have been calculated by the Property & Procurement Manager and were detailed in the Exempt Report of the Director of Environment and Shared Service.
Initial talks have been held with the landlord, Capital &
Regional who has indicated strong in principle support for the
project.
Facility
Up to eight offices (available for start-up businesses on flexible in and out terms); Networking /breakout seating; up to 20 hot desks; a 50-seat seminar space and one small meeting room. The facility would be branded at street level and given an identity more in keeping with what businesses are wanting and needing, and lay the foundations for an Enterprise Hub. Access would be from the main King Street entrance via the escalator and stairs and then by dedicating one of the two lifts from ground to first floor Business Terrace only.
|
Opening Hours
7am to 7pm Monday to Friday minimum from day one including Saturday morning. There are no Lease restrictions on opening hours; however the King Street access doors are controlled by the Mall. Security arrangements and opening times would be by agreement with them. We would need to ensure the Gateway access doors were locked when the Gateway was closed.
|
Parking
Talks are currently being held with Parking Services on possible arrangements around the Town centre, particularly lower Sittingbourne Road. Subject to talks with Capital & Regional it may be possible they would sponsor” at least one parking space for use by an anchor tenant which helps run the Hub. |
Timescales: Open July/August 2015
· November/December: Procure design team · January/February: Detailed design and tender documents issued · March/April: Procure contractor · May/June: Construction
|
Alternative options considered:
Virtual delivery
Many start-ups are launched by
aspiring entrepreneurs with no previous experience, and possibly
little exposure to a mature business environment: the result is
enterprises not being planned appropriately: markets not assessed;
products not commercialised and marketing not adequate or
unimaginative. They work largely
in isolation with few or no opportunities for
peer-to-peer networking and collaboration to form natural clusters
and opportunities for developing local supply chains. This is not
addressed by virtual delivery alone.
Many established businesses also have a lack of business skills, with little awareness of what is available; the relevance to their business and the perceived high cost of engaging help.
While there is plethora of on line resources – both public and private – businesses are frustrated that the business support landscape is too fragmented and/or irrelevant to their needs. There is plenty to choose from – but what is right?
Following extensive research by the Department for Business Innovation & Skills into understanding the barriers to take up and use of business support, the move is towards “Gateways to Growth.” In the SE LEP area this is being piloted by Southend-on-Sea through their City Deal. This is based on the Greater Manchester Growth Hub model (a £6m virtual shop window underpinned by £20m of physical infrastructure and other resources).
More recent research also confirms that the hands on approach is highly valued and achieves the best results in terms of measurable outcomes for business (and therefore the economy), and value for money for the taxpayer. Further, those on-line tools do not always work effectively and deliver value for money.
As
reported earlier the Economic Development Unit is already working
towards an integrated virtual shop window for business support,
working with partners, and linked to the current development of the
new Business CRM database and plans for a new website to replace
locateinmaidstone as part of the
mix.
Do nothing
This is not an option if the Council wants to
tackle the myriad of barriers to business growth and survival in a
strategic, coherent and effective way with the best chance of
success. This would also be contrary to the SE LEP Strategic
Plan.
Local support interventions must be
designed to be responsive to local economic conditions and
addressing areas where the demands of businesses are not being met
are critical. It is therefore important that the service is
demand-led in both design and delivery.
There are
other providers in Maidstone of co-working and flexible
accommodation, however none are best placed (even with additional
financial resource) to design and deliver the strategic lead needed
to achieve the priority outputs and desired borough-wide
outcomes.
Maidstone Council has forged strong partnerships with key support organisations to provide onsite wrap around support to businesses. Collectively these organisations will help ensure additionality and remove duplication. This working partnership model will maximize impact, and help introduce a major step change in business support across Maidstone. There is a gap in the market.
Alternative Location
An
extensive property search was originally undertaken between
February and April 2013 (Appendix A to the
report refers). This has been
reviewed on an ongoing basis most recently in July this year. What
private sector premises and services do exist does not meet the
stated need.
All available premises have failed and continue to fail at least
one of the original desirable search criteria:
· Size (minimum of 8,000sq ft)
· Flexibility of terms and costs
· Flexibility of space
· Conversion and fit out costs
· Provision of wrap around support
· Availability of dedicated seminar and meeting rooms
· A presence and ability to be branded
·
Within Town Centre, close to amenities and availability
of
parking
Talks have also been held with existing providers of flexible workspace including Basepoint. These organisations however are now beginning to re think their “office-based” approach and operating models. Existing smaller scale facilities – such as Union 23 in Maidstone – have also faced difficulties largely as a result of being too small in scale to provide a networking critical mass; fairly sector specific and with no onsite support or meeting facilities of sufficient scale to generate further income.
Detailed discussions and consideration were given to two approaches
from the private and voluntary sectors.
In each case the proposals would have provided “more of the
same.”
The “Maidstone Model” is in comparison to models where there is a greater focus on individual office spaces – which represents most of the available space in Maidstone Town Centre.
Reason Key: Expenditure > £250,000;
Wards Affected: High Street Ward;
Details of the Committee: None
Contact: Karen Franek Email: karenfranek@maidstone.gov.uk Email: karenfranek@maidstone.gov.uk.
Report author: Karen Franek
Publication date: 19/12/2014
Date of decision: 17/12/2014
Decided: 17/12/2014 - Cabinet.
Effective from: 31/12/2014
Accompanying Documents:
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