Big Lottery Fund JESSICA Briefing Session – Questions and Answers

 Big Lottery Fund JESSICA Briefing Session – Questions and Answers

Thursday 16th December 2010, 1 Atlantic Quay, Glasgow


Answers provided by:
Melloney Poole (MP), Solicitor & Head of Legal Services, Big Lottery Fund UK
Roddy Byers (RB), Head of Programme Management, Big Lottery Fund Scotland
Robbie McGhee (RM), Scottish Government Regeneration Division


Notes: Alastair Jackson, Big Lottery Fund Scotland


How will Trustees be selected?


MP: We expect Trustees to represent a selection of the groups coming together to set up the Trust, and some external recruitment of people with experience of the particular thematic areas may also be needed to fulfil the skills requirements. There will also be provision for rotation of the director Trustee positions.


Importantly, these Trustees will be working in a personal capacity, and not as representatives of other organisations. However, the successful bidding organisation’s Trustees can be associated with developments via other roles and may still be involved in the Trust’s work, or apply for funds, as long as conflicts of interest are clearly noted in advance.


What specific legal protection is offered by having both a Corporate Trustee and a formal Trust, as opposed to just a Trust board?


MP: A new Company Limited by Guarantee (CLG) acting as the Corporate Trustee, is able to conduct more activities than simply acting as the Corporate Trustee of a Trust alone, including bringing in other funding. The CLG could also continue to exist after the capital and income of the Trust fund had been expended, allowing more scope for continued work beyond the timeframes of the Trust.


How much control will the preferred candidates and the Corporate Trustee have over the selection of Trustee directors? Who makes the decisions, and how will BIG be involved?


MP: The preferred candidate will be solely responsible for appointing the director Trustees. BIG will appoint a protector for the Trust, but this position is best described as a ‘watchdog’ or ‘critical friend’, and once appointed they too will be entirely independent of BIG.


How will the new organisation be run – could it be run as a subsidiary of the preferred candidate’s organisation?


MP: No – the CLG will be set up as an independent body. Once established, the preferred candidate drops out of its running (although they remain as they currently are in terms of existing legal status and activities), and the CLG and the Trust, are fully independent.


To what extent will the preferred candidate be able to shape the Trust?


MP: It is up to the preferred candidate to outline in the Expression of Interest the shape of the Trust as far as they see fit, and draw up a governance and business plan. This will then be assessed at the due diligence stage.


Are there any funds to support organisations to apply to become preferred candidate?


RB: No. However, the application process for preferred candidate only requires a short proposal form which should not incur significant expense. 


What is the incentive for organisations to bid to be preferred candidate?


RB: Development funding (up to £200k, although it is anticipated that not all of this amount would be required) will be available, and the preferred candidate will have a unique opportunity to shape the development of the Trust to deliver £15m of business.


Does the development funding include full cost recovery?


RB: Yes. The exercise of setting up the Trust will be cost neutral to the preferred candidate.


Could the new corporate body for the Trust sub-contract work to organisations involved in the setup of the Trust (e.g. organisations involved in a consortium bid)?


MP: Yes. There is nothing to stop this, so long as it is appropriate to the business plan.


How will the Company Limited by Guarantee – set up to act as the Corporate Trustee – pay its running/revenue costs?


MP: All costs for work relating to the delivery of the Trust will be recovered from the Trust endowment. Where the CLG is engaged in other work or projects outside the limits of the Trust, these costs would have to be covered by other funding or revenue streams.


What happens if the Company Limited by Guarantee goes bust?


MP: As with all grants, BIG would seek to recover funds in such an eventuality in line with standard practice.


The documentation suggests a lifespan of 10 years for the Trust. Is BIG expecting the Trust to give out money until year 10? And if so, who will look after the investments if the Trust is then wound-down?


RB: BIG has to prescribe a timeframe for the Endowment at inception.  The Trust can operate within this timeframe to maximise its impact.  Decisions about future investment would be considered nearer the end of the process by BIG.  Whilst this specific endowment may conclude, the Corporate Trustee may continue to exist and function in relation to other activities.


Will the composition of the Trustees need to be representative of the areas that will be covered by the funding? And will the local communities be involved in this selection process?


MP: It will be up to the preferred candidate to determine what method they would like to use to appoint Trustees, so such requirements could be set up by the preferred candidate if felt appropriate.


What are the implications for European Regional Development Funding (ERDF)?


RB: There are 2 streams of JESSICA funding, 1 using European funding, and this stream using BIG funding. The 2 funds are held entirely separately and have no financial dependency on each other.  The European funds are fully matched prior to arriving in the holding fund and BIG’s funds are not part of the match equation.


Does integration of the 2 pots of JESSICA money (BIG funding, and European funding through the Scottish Govt.) stop short of joint decision making, and mandatory co-funding of projects?


RB: Technically, yes. Ideally, BIG would like to see work being funded by both funds in a co-ordinated and joined-up way – and will encourage this – but co-funding and joint decision making will not ultimately be mandatory. 


What will be the power balance in the relationship between the BIG funded JESSICA Trust and the European funding available through Scottish Govt.?


RB: It is hoped that these bodies will be able to work together to deliver the aims of the JESSICA programme. However, as they will be separate bodies, and legally independent, they can ultimately act independently if there is not a commonality in the work they intend to fund.


What percentage of money does BIG anticipate will be recycled by the Trust? 


RB: A fixed percentage has not been set. However, the Trust will likely have powers to loan or invest money as well as provide grants, so BIG hopes that the amount of the original endowment recycled and reinvested would be maximised.


Are there any further geographical targets for the funding beyond the 13 areas indicated in the briefing documentation?
RM: No. The 13 local authority areas mentioned are the only spatial targets that will be specified for the funding in order to maintain the joint funding intention.


What is the necessity for such a tight timescale? Could better consortia not be constructed if more time is allowed?


RB: The time drivers relate to the European investment in JESSICA. BIG would like to get the Trust up and running at the same time as the European funding becomes available, to maximise the impact of this money, and to meet the aspiration for the two funds to work alongside each other. However, this timescale could be more flexible if bidders generally feel there is a strong business case in taking longer.


It could be difficult to negotiate partnerships in these short timescales, especially for less experienced groups that have not set up other Trusts in the past. Has BIG imposed such short timelines on other Trust developments?


RB: There should be sufficient time for groups to undertake some ‘in principle’ discussions and fill out the Expression of Interest form within the deadline. However, if there is a general view that more time is required for consortia to be developed, then BIG could look at revisiting timescales.


Will the investment into city areas through JESSICA affect BIG’s priorities for other funding?


RB: No. BIG’s other investment priorities around these areas will be unchanged.


Does the BIG Scotland committee have the final say over whether money is released?


RB: Yes. The Scotland Committee will be required to endorse the appointment of a preferred candidate and to agree the proposals brought forward.


Could BIG produce a flow chart of the process from start to full establishment of the Trust?


RB: Yes