DRAGON S DEN - ALLOCATION OF FUNDING FOR THE

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1 Report To: EXECUTIVE CABINET ITEM NO: 7 Date: 27 March 2013 Executive Officer Member/Reporting Councillor John Taylor, Deputy Executive Leader Tim Rainey Assistant Executive Director, Media, Marketing and Communications Subject: Report Summary: Recommendations: Links to Community Strategy: Policy Implications: Financial Implications: (Authorised by the Borough Treasurer) Legal Implications: (Authorised by the Borough Solicitor) Risk Management: Access to Information: DRAGON S DEN - ALLOCATION OF FUNDING FOR THE This report sets out a process for establishing a grant scheme for entrepreneurs to be known as Dragon s Den. That the Dragon s Den report be considered and approved to enable Tameside Enterprise Board to be commissioned to deliver the scheme. The initiative supports the delivery of the Community Strategy Prosperous Tameside aim. The initiative supports the delivery of the Council s Corporate Plan by supporting economic growth and opportunity. The Dragon s Den supports the Council s policy of economic growth and opportunity. The scheme also supports the Council s use of small grant schemes to increase capacity in certain areas (in this case new businesses). The Implications of Dragon s Den will be to raise awareness across the Council s policy making framework of direct schemes to intervene in developing economic growth and opportunity. The scheme will cost 20k and will be funded from Local Innovation Award funding which the Council is in receipt of. Delivery costs will be met from existing budgets. This report sets out accountable governance arrangement for innovative business set up scheme. If approved by Executive Board this proposal will be implemented following an Executive decision. Failure to set out a robust process would be detrimental to the reputation of the Council and would not be best use of public money. Any further information can be obtained from the report author, David Berry, Programme Manager, Service Redesign and Change:- phone: david.berry@tameside.gov.uk

2 1.0 INTRODUCTION 1.1 This report sets out Tameside Council s (TMBC) approach to introduce a grant scheme for entrepreneurs to be known as Dragon s Den. The scheme will be administered by the Tameside Enterprise Board (TEB Tame Valley Regeneration Consortium Ltd) and delivered through the Tameside Centre for Excellence (TCFE). 1.2 The Council began development of a grant scheme for entrepreneurs following the success of similar schemes across Greater Manchester and our recent experience of supporting new businesses. 1.3 The scheme supports the Council s vision and core purpose by supporting economic growth and opportunity. Tameside needs to develop a stronger economy by attracting investment and business to the borough and increasing the number of residents starting businesses. This scheme supports this aim as we promote entrepreneurship in our further education students and provide them with opportunity to be successful by working in partnership with the public sector. 1.4 The scheme is justified by the challenges provided below. Although the scheme will not necessarily resolve these issues it will provide a clear response and impetus to support entrepreneurship. The scheme would raise the profile of mentoring and business support available from the TCFE, the Town Teams and the Tameside Enterprise Board. In November 2012 there were 9.8 JSA claimants in Tameside for every unfilled jobcentre vacancy. This is compared to 3.7 in the North West and is the highest ratio across Greater Manchester with Bury being the second highest at 5.7 demonstrating the need to strengthen the business base in the area and encourage more businesses to reside in Tameside thus increasing the number of job opportunities available locally. The Greater Manchester Forecasting Model (GMFM), produced in 2010, also suggests that Tameside was particularly badly hit during the recession, and total employment is not forecast to return to 2008 levels before 2032, the end of the forecast period. Employment has also shown a continued decline in Tameside for some years before the recession. Entrepreneurship levels are measured by the formation of new businesses in the area and these remain relatively low in the borough. Just 4.0 businesses for every 1,000 residents were created in Tameside in 2008 the joint lowest (with Wigan) in Greater Manchester. Comparatively, there were 4.5 businesses created per 1,000 adult residents in Oldham, 5.6 in Manchester, and up to 7.2 businesses per 1,000 adult residents created in Trafford. Greater Manchester experienced the birth of 5.2 businesses per 1,000 adult residents, and the UK an average of 5.5. In February 2012, there were 23,830 people in Tameside classed as benefit dependent. This equates to 17% of the working age population and is higher than both the North West (15.3%) and Great Britain (12.5%) averages. Tameside has the 5 th highest proportion of benefit dependent residents in Greater Manchester. The number of people claiming out of work benefits in Tameside in February 2012 is the highest to date. 13,200 people were claiming Employment Support Allowance/Incapacity Benefit in February 2012 and equates to 9.4% of the working age population. This compares to 8.5% in the North West and 6.5% in Great Britain. Tameside has the third highest proportion of working age residents claiming ESA/IB across Greater Manchester. In August 2012, 27.88% of households were claiming council tax benefit, slightly higher than the North West average at 26.3%. This was the sixth highest in Greater Manchester.

3 2.0 THE SCHEME 2.1 Dragon s Den will provide 20,000 of Council funding (up to 1000 per applicant) to the TEB to support entrepreneurs. The scheme will be taken forward on the following principles. a) TMBC commissions the initiative setting criteria and conditions. b) TEB administers payment and conditions of the grant. c) TCFE develops and supports potential applicants from within the College and from Job Centre Plus. d) The Dragon s Den (private business/tcfe/tmbc) select the entrepreneurs they judge to have the best chance of succeeding. e) All parties support successful applicants to have the best possible chance of succeeding in their enterprise and ensure the grant is used within the conditions stipulated. f) Business does not conform to Local Authority boundaries and can operate on a global scale. g) Business has a high failure (1 in 3 fail in the first three years) h) This scheme provides opportunity for jobs to be created (but there are no guarantees of success) i) The process will happen at least once per year (and repeated as required) 2.2 The process chart below sets out the Dragon s Den process. The support of the Dragon s and the TCFE will be crucial elements of the process. Dragon's Den process map TMBC Executive Decision to fund the scheme TCFE Markets the scheme Residents apply and are checked for eligibility TEB approve applicants Applicants spend 1 week with TCFE preparing business plans Applicants pitch to the Dragon's Den receiving up to 1000 if successful TEB administer grant to successful applicants Town Team and Dragon's support entrepreneurs Applicants succeed or fail in first year TEB audit process and provide a report to Prosperous Delivery Board 2.3 The scheme would run to a flexible timetable, the process would be demand led and Dragon s Den funding panels would be held as appropriate. Due to the relatively small size of the funding pot ( 20k) the scheme may work better by being flexible setting clear application dates but allowing business ideas to be acted upon rather then wait for set deadlines. 2.4 The scheme would contain certain rules that would be expanded within the application guidance. a) Applicants must live at a Tameside address b) Successful applicants must register their business and trade in Tameside for at least 12 months c) Applicants must repay the grant in full should any conditions be breached

4 d) Successful applicants would receive a maximum of 1000 for any legitimate business idea that the Dragon s Den deemed worthy of funding (subject to conditions in funding agreement) 2.5 The Council will seek monies to be repaid should they not be spent correctly, this will not infringe on allowing businesses to be innovative and flourish but will protect the use of public money should circumstances arise where the applicant misuses grant funding. 3.0 RISKS 3.1 The Dragon s Den carries similar risks to other grant schemes. These risks have been set out in the table below alongside mitigations. It is important to acknowledge in the commissioning of the Dragon s Den scheme that all the businesses may fail or may relocate outside of Tameside s geographical boundaries. Appendix A sets out the grant conditions for each applicant. Ref Risks to Tameside MBC Mitigations and controls 1 Public funding is misused following transfer to delivery body. 2 Low number of applications or poor quality applications. 3 Unsuitable applications are submitted 4 Unsuitable applications are funded 5 The funding contract between TEB and the applicant is not robust, or payment is not expedient 6 Applicants fail, have poor growth or misspend money 7 Poor governance of public funding TMBC to produce service agreement for administering the 20k setting out conditions for use. Applicants spend one week with TCFE working on business plans and ideas to improve chances of getting good quality applications. Unspent monies will be returned to the Council. All applications will be scrutinised by TCFE and TEB in line with scheme conditions and service agreement. The Dragon s Den will comprise of two business representative along with a TMBC representative (R Monk, T Rainey or D Bourke) and a Tameside College representative. The TMBC representative will provide robust challenge to the Dragon s decision making to ensure no unsuitable bid is funded as per grant conditions. TMBC will produce the funding contract to ensure it is robust. TEB will be have a target payment period within the agreement. The Dragon s Den will only fund ideas that they judge (using professional opinion) have an opportunity to succeed. The funding contract will set out penalties to clawback monies should this be used for fraudulent or illegal purposes. The Town Team and Business Centre will provide advice and support to help the business survive and grow The TEB will provide a report to the Prosperous Delivery Board to set out the progress of successful applicants and to provide financial monitoring. 4.0 FUNDING 4.1 The scheme will be funded in through Local Innovation Award funding. In future years should the Dragon s Den scheme be continued it will be funded from You Choose funding.

5 5.0 BENEFITS 5.1 Dragon s Den supports the Council s aim of helping to deliver the aim of supporting economic growth and opportunity. The scheme is small but will directly support the following priorities set out in the Corporate Plan: Strengthening the local business community and our town centres Work with businesses to create economic opportunities for residents Reduce levels of benefit dependency 5.2 In reality the scheme may support applicants to start businesses which subsequently fail. This risk could be outweighed should an applicant be successfully in growing a business and remaining located in the Tameside area. 5.3 The scheme sets a clear statement of intent from the Council that it wants to support entrepreneurs to create and grow businesses. 5.4 The scheme should not set arbitrary targets for success but should be monitored against the following measures to judge how we can learn and improve delivery. The key measure below will be new businesses still trading after 12 months, Number of applications accepted for the programme Number of successful bids receiving grants Number of new business start-ups Number of new business start-ups still trading after 12 months The number of jobs created 6.0 EQUALITIES 6.1 The Dragon s Den scheme is a positive opportunity for new entrepreneurs to access funding and tailored support in setting up a business. The public sector equality duty (section 149 of the Equality Act 2010) requires the Council, as a public authority, to have due regard to the need to eliminate discrimination, victimisation & harassment; advance equality of opportunity; and, foster good relations. It is not anticipated that there will be any negative impact on any of the protected characteristic groups following the implementation of this scheme, which will not result in the withdrawal or reduction in any existing support. We will monitor the scheme to determine any potential impacts - age, pregnancy and maternity, ethnicity, gender, disability, marriage/civil partnership, sexual orientation, religion and belief, gender reassignment. 6.2 The scheme will be monitored to ensure that it is accessible to all residents over the age of 16. In commissioning TEB to deliver the scheme specific conditions will be written into the provision of the grant to ensure that the Provider does not discriminate against any person on the grounds that they are or are not a member of a particular protected characteristic; does not treat a person less favourably for a reason relating to that person s disability (as defined by the Equality Act 2010) nor fail to comply with a duty under that act to make reasonable adjustments in relation to a disabled person; that monitoring is undertaken of applicants to ensure that under-represented groups could be targeted in future years of the scheme s delivery during the marketing and referral stages; and that the Provider will ensure that it observes as far as possible any code of practice issued by the Equality and Human Rights Commission or any of its predecessor bodies. The provision of the grant will also set out specifically that the process must be accessible with regards to the application process. We are confident that the tailored support provided by TCFE to applicants will support the needs and requirements of those entering the process.

6 7.0 TIMELINE 7.1 The timeline for this work is as follows Scheme start date 1 April RECOMMENDATIONS 8.1 Executive Board are requested to consider this report and approve the scheme for implementation in the new financial year.