Agenda item

From the Cabinet, 8 October 2019

Further to Minute 37 of the Cabinet, the City Council considered a report of the Deputy Chief Executive (Place), which detailed a loan from the West Midlands Combined Authority (WMCA) in relation to the UK Battery Industrialisation Centre (UKBIC).

The report indicated that more car manufacturers were announcing their intention to move towards building electric cars and the demand for batteries would increase sharply over the next ten to twenty years.  Currently, expertise in battery development was concentrated in Asia, Germany and the United States and the UK was lagging behind.

The UK Government announced the Faraday Challenge, part of the Industrial Strategy Fund, during the summer 2017. It aimed to fund battery research and development work to ensure that the demand for batteries leads to the creation of jobs here in the UK rather than overseas in battery manufacturing. One of the strands of the Faraday Challenge aimed to bridge the gap between battery research in universities and large-scale battery production by car manufacturers.

In November 2017, as part of a national competition £80m of Faraday Challenge funding was awarded to the consortium of Coventry City Council, Coventry & Warwickshire Local Enterprise Partnership (CWLEP) and Warwick Manufacturing Group (WMG), University of Warwick to develop a manufacturing scale-up facility in the West Midlands region. The funding was awarded through an open competition run by the Advanced Propulsion Centre (APC) and Innovate UK. 

This funding award was approved by Cabinet and Council in November 2017 with the authorisation to accept £80m of Faraday Challenge funding and up to £40m of local match funding, which at the time formed part of the West Midlands Combined Authority (WMCA) Devolution Deal 2 bid to central Government. Since then the Devolution Deal 2 has not materialised the project has been looking to secure other sources of local match funding.

Earlier this year the project scope was enhanced in response to industry demand and the full cost rose to £126m. In response, Innovate UK awarded an additional £28m through the Faraday Challenge on the condition that a newly revised local contribution of £18m was found to match the Faraday Challenge grant investment.

The UKBIC Partnership (CWLEP, WMG and Coventry City Council) has managed to secure the £18m from the WMCA in the form of a repayable grant.  This funding will be secured against UKBIC assets and repaid using UKBIC Ltd surpluses over time. The funding will be of no cost to the Council.

The UKBIC programme was part-way through development and progressing well. The programme was due for completion in March 2020 when the UKBIC facility would open for business. 

RESOLVED that the City Council:

1)  Authorises the Council to act as Accountable Body and accept the £18m contribution from the WMCA as a repayable grant and to make the necessary adjustment to the Capital Programme.

2)  Delegates authority to the Director of Business Investment and Culture, the Finance Manager (Corporate Resources) and the City Solicitor and Monitoring Officer to undertake the necessary due diligence, negotiate the terms and conditions of the funding agreement with the WMCA and also enter into the necessary agreement.

3)  Delegates authority to the Director of Business Investment and Culture and the Finance Manager (Corporate Resources) following consultation with the Cabinet Member for Strategic Finance and Resources (in the event that the legal documentation are not completed before the end of October) to commit the necessary agreed funding in recommendation 1 above up to a value of £5m for the delivery of the Project.

4)  Delegates authority to the Director of Business Investment and Culture, the Finance Manager (Corporate Resources) and the City Solicitor and Monitoring Officer to finalise the terms of the transfer of the funding to UKBIC and the repayment mechanism back to the Council.