Strategic Growth Fund – Business Case & Investment Strategy

The Assignment

The London Borough of Hammersmith & Fulham has ambitious plans to encourage growth and regeneration in the borough. But, like many other authorities, the Council is facing continued financial pressures in the next few years that threatens its ability to deliver these plans while continuing to provide its essential services. As a result, the Council is seeking to combine the objectives of seeding the economic growth and regeneration of the borough while generating social and financial returns for the Council by supporting this growth.

The Council needed a new way to invest in the borough to support, accelerate and unlock regeneration and economic growth. Establishing a Strategic Growth Fund (SGF) provided the opportunity for the Council to establish a stronger focus on investment whilst also supporting the delivery of the Council’s strategic goals. The SGF creates a mechanism for implementing a programme of investment that can generate both capital and revenue which will provide funding for the delivery of the Council’s strategic ambitions.

31ten were appointed to develop and prepare a Business Case, including investment strategy and governance documents, to successfully set up a £200m fund to address poor growth in the Borough. The Business Case was prepared and based on the application of the HM Treasury’s Five Case model.

The Role

The Council appointed us to support them in reviewing their options for establishing an Investment Fund to support economic growth. We supported the Council in defining a set of objectives and principles for the Fund through a series of workshops. We used this same approach to also determine the range of options to be considered, the decision-making criteria to be used to evaluate them and the critical success factors that were to form part of the consideration.

We prepared a financial model to allow a range of example investments to be inputted, cash flowed and measured for viability. Sensitivity analysis was undertaken to adjust the inputs in the model to test scenarios at different levels of income/cost and assess viability. A Dashboard was prepared to provide the Council with information to allow it to monitor the Fund as a whole at portfolio level.

We prepared a Business Case, using a proportional approach to the HM Treasury 5 Case Model, to set out the range of options and rationale for the preferred option for the Council to establish the Strategic Growth Fund. This Business Case was used by the Council to obtain Cabinet approval to establish the Fund.

Key Outcomes

Our work supported the Council in steering and refining the Hailsham Aspires masterplan, identifying issues and opportunities and a transparent audit to explain how and why the masterplan has evolved from a viability point of view. By approaching the commission this way, our work was used to reassure and inform stakeholders, including planning case officers as to the scope and scale of the masterplan, and in particular the number of residential units and typologies as well as the proportion of affordable housing units.