Committee:

1. Executive summary

1.1 The purpose of this report is to seek approval from South Hams District Council (SHDC) for the submission of a bid to Round 1 of the UK Seafood Infrastructure Funding opportunity.

1.2 The scheme is intended to support, modernise and rejuvenate the UK fishing Industry and strength the seafood supply chain through investment in infrastructure projects.

1.3 SHDC, in partnership with the Salcombe Harbour Authority (SHA), is acutely aware of the fishing industries importance to the local community and economy and are looking to submit a funding bid to replace the existing stores, which are now in excess of 40 years old, through the construction of purpose built buildings and modern infrastructure.

1.4 The project cost has been estimated at £4,000,000.

1.5 A project cost of £4,000,000 equates to a required match funding contribution from SHDC of £1,000,000 (25%).

1.6 It is recommended that the match funding is made up of a contribution of £200k from the Marine Infrastructure Reserve, £200k from the Business Rates Retention Reserve and the remainder of £600,000 from the Public Works Loan Board (external borrowing).

1.7 The annual repayments (MRP and Interest) on the £600,000 borrowing can be funded from future rental growth and the existing headroom in the asset revenue budget.

1.8 As per recommendation 2 the exact financial treatment to be delegated to the S151 officer in consultation with the Leader, Portfolio Holder for Assets and Head of Paid Service so as to deliver the most sustainable financial outcome.

1.9 The bid has recevied in principle support from Cllr Judy Pearce and Cllr Mark Long. Cllr Julian Brazil, in his capacity as chair of the Harbour Board, has also been briefed.

1.10 The development will contribute to boosting the rural & marine economy through investment in the UK’s marine and maritime sector, prevent jobs and local skills from becoming ‘at risk’ and ensuring Salcombe remains a sustainable community.

1.11 The development entirely aligns to the recommendations in the LEP Coastal Productivity Plan to protect and enhance coastal communities.

1.12 This bid is complementary to the bid being submitted by South Devon College for a “fishing vessel bridge simulator” to facilitate skills training for the type of vessels that operate out of Salcombe.

1.13 The funding application needs to be submitted by 12:00BST on Tuesday 24^th May 2022.

2. Background

2.1 The UK Infrastructure Fund is part of the £100 million funding initiative announced by the PM.

2.2 Applications for between £250,000 and £5 million is available through the funding window.

2.3 The funding comprises of two elements:

a. Infrastructure: the infrastructure component will invest £65 million into modernising current infrastructure to accommodate increased fishing quota and adapt to new trading conditions.

b. Skills and Training: the skills and training component will invest up to £10 million into the sector to address skills gaps within the seafood industry.

2.4 Batson Fish Quay provides the platform for the towns thriving commercial fishing industry which is an important contributor to the local economy. In 2020, vessels landed approximately 11,000 tonnes of shellfish into Salcombe, with a first sale value of between £3 million and £4 million, even though the facilities they operate from amount to little more than 40 year old wooden sheds.

Figure.1 Salcombe Fish Quay Location Plan

2.5 There are approximately 25 commercially registered fishing vessels in Salcombe, the vast majority being dedicated crab and lobster catching vessels and the remainder being licensed to catch both shellfish and wetfish.

2.6 The existing fisherman stores, which are owned by SHDC, were constructed in 1982 with the primary aim of storing fishing gear for commercial fisherman.

2.7 As time has passed and the nature of businesses continued to develop and modernise, the suitability and flexibility provided by these aged and basic stores has diminished.

2.8 As waterfront premises once utilised by maritime businesses are being swiftly developed into prime real estate, to cater for the increasing tourism need, this external pressure is having a detrimental effective on the ability to both sustain the local industries and also provide them with the opportunity to expand and thrive in Salcombe.

2.9 This lack of available premises means that fishing businesses in the area are being forced to operate in ways that are not commensurate with modern, efficient business needs.

2.10 Significant areas of vital quayside space is now being used to store vital equipment as well as the provision of additional parking spaces for the commuting workforce.

2.11 This squeeze this making the quayside a difficult and challenging working environment which adversely effects the efficiency of the business, costs as well as long term business viability.

3. Outcomes/outputs

3.1 The key project objectives are the:

· Delivery of a modern facility to support the fishing industry. The design is to pay particular attention to the creation of a good quality, energy efficient, climate proofed and healthy working environment to replace the existing old and outdated infrastructure.

· Design of a facility that provides better traffic flow, more efficient fishing operations and improves Health and Safety.

· Improved the resilience of the surrounding quayside infrastructure to better support fishing operations.

3.2 The recommended concept, to be used to support the bid, is included within Appendix A of this report.

3.3 The development will create 11 stores with each stores including a mezzanine and enhanced welfare facilities.

3.4 The mezzanine will add approximately 50% to each store area and could be utilised for increased gear storage or for increasing the capacity of product storage, be that live or processed shellfish.

3.5 This will mean that smaller scale fishing businesses will no longer have to pay additional fees to store gear off site, or for increasing the capacity of product storage- be that in vivier tanks (live shellfish) or in chillers (wetfish/processed shellfish).

3.6 The inclusion of a meeting and teaching space will offer a location to provide skill enhancement courses, to the existing workforce, as well as facilities for industry partner, policy makers and regulators (such as DEFRA) to hold meetings in the vicinity.

3.7 The need for dedicated space will become even more critical when South Devon College launch the Fisher Apprenticeship, for which members of the local fleet have been approached for supporting new entrant engagement and training. It will also provide the opportunity to strengthen strategic purpose with consideration of the separate funding bid being made by South Devon College for the instalation of a bridge simulator at their new facility at Noss on the Dart bid.

3.8 The development will address the industry shortfalls and infrastructure limitations which are constraining the productivity of the modern businesses that use the quay.

3.9 In the medium term delivery will meet a key output of the Salcombe neighbourhood plan which indicates the need for support for local businesses associated with the fishing, tourism, marine and associated service industries.

3.10 In the long term the delivery of this infrastructure upgrade forms an integral part of SHDC’s Batson masterplan and will help to retain a local skilled workforce and ensuring Salcombe remains a sustainable coastal community.

4. Project Finances

Existing Revenue

4.1 The stores are owned by SHDC but are managed by Salcombe Fishermen’s Stores limited (SFS Ltd), (on a maintenance only based lease) which is comprised of a collective of local commercial fishermen and fishing related businesses. Each store is rented from this Community interest company by individual businesses operatives.

4.2 The existing facility brings in a revenue of approximately £25,000 per year.

4.3 Match Funding

4.4 If successful the Council would be required to provide 25% match funding, with evidence of this commitment being provided in the form of a letter.

Project Cost

4.5 The project cost has been estimated at £4,000,000.

4.6 A project cost of £4,000,000 equates to a required match funding contribution from SHDC of £1,000,000 (25%).

4.7 It is recommended that the match funding is made up of a contribution of £200k from the Marine Infrastructure Reserve, £200k from the Business Rates Retention Reserve and the remainder of £600,000 from the Public Works Loan Board (external borrowing).

4.8 The annual repayments (MRP and Interest) on the £600,000 borrowing can be funded from future rental growth and the existing headroom in the asset revenue budget.

4.9 As per recommendation 2 the exact financial treatment to be delegated to the S151 officer in consultation with the Leader, Portfolio Holder for Assets and Head of Paid Service so as to deliver the most sustainable financial outcome.

4.10 The project would also alleviate the future maintenance required on the asset by upgrading the facility to modern working standards.

4.11 The Marine Infrastructure Reserve has a current uncommitted balance of £231,000 and the Business Rates Retention Reserve has an uncommitted balance of £2,100,000.

4.12 A full business case would be developed and brought for approval once the bid is successful and more design development has been undertaken.

5. Options available and consideration of risk

5.1 The recommended approach is for Council to approve the submission of a funding application and the intent to provide the required match funding up to £1.0 million.

5.2 This is the recommended option as the development will contribute to boosting the rural economy, through investment in the UK’s marine and maritime sector, and ensure that Salcombe remains a sustainable and viable coastal community for future generations.

5.3 At this early project stage the main risks are:

a. Obtaining of Planning Permission and various other statuory consents.

b. Construction risk and price fluctuations which are currently being experienced in the industry.

c. Programme, as if successful funding needs to be spent by the 31^st May 2024, which is challenging.

5.4 Mitigation at this project stage is that if the bid is successful the Council is not compelled to proceed, so the programme and financial risks can continue to be refined and understood until the bid outcome is known.

6. Proposed Way Forward

6.1 Subject to approval the funding application would be submitted electronically to the UK Seafood Infrastructure fund by 12:00BST on Tuesday 24th May 2022.

6.2 In accordance with the application timetables the next project milestones would be:

Deadline for submission of Applications	Date	24^th May 2022
Deadline for submission of Applications	Time	12:00 BST
Applicant Due Diligence Prior to Evaluation		24^th May - 24^th June 2022
Evaluation of Applications including enhanced Due Diligence and awards panel	Start	27^th June 2022
	End	4^th Aug 2022
Funding award notification		5^th Aug – 9^th Sep 2022
Site visits		5^th Aug- 26^th Aug 2022
Grant funding agreements issued and returned		29^th Aug- 12^th Sep 2022
Funding start date		29^th Aug- 12^th Sep 2022
Submission of Draft Reports		Project by project basis
Funding end date		Dependent on approved project timeline but no later than 31^st March 2024
Submission of final reporting including grant usage certificate		Dependent on approved project timeline but no later than 31^st May 2024

7. Implications

Implications	Relevant to proposals Y/N
Legal/Governance		A full review of the terms and conditions of the bid will be undertaken in parallel with the submission work.
Financial implications to include reference to value for money	Y	A project cost of £4,000,000 equates to a required match funding contribution from SHDC of £1,000,000 (25%). It is recommended that the match funding is made up of a contribution of £200k from the Marine Infrastructure Reserve, £200k from the Business Rates Retention Reserve and the remainder of £600,000 from the Public Works Loan Board (external borrowing). The Marine Infrastructure Reserve has a current uncommitted balance of £231,000 and the Business Rates Retention Reserve has an uncommitted balance of £2.1 million. The annual repayments (MRP and Interest) on the £600,000 borrowing, can be funded from ring-fencing the existing rental income stream from the asset. It is recommended that a full business case would be developed and brought for approval once the bid is successful and more design development has been undertaken.
Risk	Y	All construction projects contain risk. The contingency on this project reflects the ground works and sensitive nature of the site, and has been set at 15% of the construction budget.
Supporting Corporate Strategy	Y	Enterprise
Climate Change - Carbon / Biodiversity Impact	Y	The design will pay particular attention to the creation of a good quality, energy efficient, climate proofed and healthy working environment to improve the operational carbon footprint of the facility and mitigate the future maintenance burden of the existing facility.
Comprehensive Impact Assessment Implications
Equality and Diversity
Safeguarding
Community Safety, Crime and Disorder	Y
Health, Safety and Wellbeing	Y
Other implications	N	N/A

Supporting Information

Appendices:

Appendix A – Concept Design

Report to:			Annual Council
Date:			19 May 2022
Title:			Submission to UK Seafood Fund: Infrastructure (Round One) Batson Fish Quay Infrastructure Upgrade Bid, Batson Creek, Salcombe
Portfolio Area:			Enterprise, Cllr Hilary Bastone
Wards Affected:			Salcombe
Urgent Decision:		Y		Approval and clearance obtained:			Y


Author:	Dan Field				Role:	Capital Programme Manager
Contact:	Email: Dan.Field@swdevon.gov.uk