Leeds City Region Investment Week: Local authorities join forces to launch major fund

A £500m Economic Investment Fund that aims to drive development opportunities, accelerate economic growth and create jobs across the Leeds City Region was unveiled today at the MIPIM property conference.

The fund is set to launch with £50m of mezzanine finance over the next two months, with plans to make up to £400m available when the main fund launches later this year.

Senior figures from the four local authorities backing it – Bradford, Leeds, Wakefield and York – believe by leveraging further institutional funds, the Economic Investment Fund could eventually boast up to £500m.

Unveiling the fund at a Leadership for Growth business breakfast organised as part of the Leeds City Region Investment Week at MIPIM in Cannes this morning, Bradford Council chief executive Tony Reeves said there was a collective belief across the city region that its collective economies had to grow faster.

Mr Reeves told the audience: “We have said that if we pool our money together, and take a different approach to risk, we can grow more quickly. This in turn will create further momentum and that’s vital.”
 
He said the launch of the fund had been driven by three factors: a lack of funding from the banking sector; a need to provide mezzanine finance; and that there was a role for the public sector to play in stimulating new classes of investment.

Mr Reeves added: “We want our fund to link to other funds that will attract economic investment and unlock risk.

“We want to intervene with the private sector to stimulate growth. That’s our ambition. It’s about growth for the city region.”

Mr Reeves highlighted the example of the Southgate development in Bradford (pictured), which stalled because of funding issues until Bradford Council stepped in to provide vital finance to accelerate the scheme.

The fund will see the four local authorities financially backing it but it will be run by an independent fund manager and have match funding from the Growing Places Fund.

Stuart Howie, of PwC, who has helped to formulate the platform to create and run the fund, said: “The model being developed tackles two issues: aligning what the public sector does across the city region and investing in a common strategy.

“There is market failure in terms of debt finance. The credit tide has gone out. The first sectors to be hit were construction. Banks also not taking risks with new technologies and sectors.”

Mr Howie said local authorities taking part would have the ability to reinvest any profits made back into the city region’s economy.

“This framework provides the opportunity to drive projects through. It’s looking to be a game changer and bring money in.”

Tom Riordan, chief executive of Leeds City Council, said: “We realise we need scale to make an impact. Every one of our local authorities in the city region has an appetite for growth.”

Katie Stewart, head of economic development at York City Council, added: “This is a massive statement from us all. We know together we’ve got the critical mass to compete on the global stage.”

And Andy Wallhead, corporate director for regeneration and economic growth at Wakefield Council, said the new fund would potentially speed up the delivry of projects as the money would be coming from a single pot.

“The beauty we have here is have a single appraisal framework and one decision making process,” he said. “It will cut through bureaucracy and red tape. This will be about getting money out to the right projects.”

Lurene Joseph, chief executive of Leeds and Partners, which has organised the Leeds City Region delegation to MIPIM, said: “We do see this model as one to be replicated across the UK. We want to do it and we want to do it now. It’s all about taking an innovative approach in the market.”

The fund will provide investment to any sector with a particular focus on professional services, advanced manufacturing, infrastructure, technology, healthcare and development.