local authority finance


DCLG & Bristol Temple Meads, Science Vale, Solent and Newquay Aerohub Enterprise Zones

Enterprise ZonesThe assignment

One of the benefits brought by being granted Enterprise Zone status is that the Zone is permitted to retain all new business rates generated above an agreed baseline. Understanding the likely quantum and timing of this additional income is key to supporting decisions as to how best it can be used to forward fund enabling infrastructure and other investment required on the Zone.

Our role

31ten Consultants worked with multiple stakeholders including local authorities, LEPs, the HCA, private organisations, Network Rail and DCLG staff to develop an approach to gain a full understanding of the potential quantum and timing of business rates that each zone could generate.

This included:

• Ensuring delivery plans for the EZs and the individual sites within them were robust and deliverable by challenging those that already existed and the assumptions that underpinned them with regard to size, timeframe, likely use etc.;
• Building a bespoke financial model to calculate the likely quantum and timing of revenue based on the agreed assumptions;
• Revenue/expenditure profiles over the 25 years of the EZ to identify “deficit” years;
• Running a series of scenarios and sensitivities including Monte Carlo analysis to consider the likelihood of each scenario;
• Calculating the size of various loan types (commercial/PWLB) that could be financed by the potential income; and
• Making recommendations as to how this “captured” income could be used to forward-fund and generally support the delivery of major infrastructure and development and delivery strategies for the zone.

Key outcomes

Each of the Zones we have worked with now as an excellent understanding of both the total business rate income it can expect to receive over the life of the Zone and when it can expect to receive them. This understanding is key to decision making regarding infrastructure and other investment, whilst also supporting its business case to funders for upfront debt or other funding.