Business case by Durham Tees Valley Airport for £5 million grant

G. Stapleton made this Freedom of Information request to Tees Valley Unlimited

This request has been closed to new correspondence from the public body. Contact us if you think it ought be re-opened.

The request was refused by Tees Valley Unlimited.

Dear Tees Valley Unlimited,
You have offered a grant of £5 million to Durham Tees Valley Airport to enable a road to be built from the north to the south side of the airport.
What was the business case submitted by DTVA to justify the need for the grant?
What safeguards or other conditions are included in the offer of the grant?
Is there any profit share or clawback provision that would allow the grant to be recovered from future profits from the land on the south side?
In addition to seeing the business case I would also like to see the due diligence report that Mr. Catchpole of TVU has said was being prepared before the grant was finalised
Yours faithfully,
G. S. Stapleton

Carter, Irene, Tees Valley Unlimited

2 Attachments

We acknowledge receipt of the FOI request and will respond by 1^st
December 15.

 

Please confirm that this supersedes request 300447.

 

Regards

 

 

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Dear Carter, Irene,
I confirm that the request dated 3rd November which included the request for information about the due diligence report supersedes the earlier request no. 300447

Yours sincerely,

G. Stapleton

Carter, Irene, Tees Valley Unlimited

Thank you for clarification

Regards

Irene Carter
Office Manager
Tel: (01642) 524431
Fax: (01642) 632001
eMail: [email address]

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Carter, Irene, Tees Valley Unlimited

2 Attachments

Mr Stapleton

 

Further to your FOI request of today please find our response below.  

 

 

 1. A full business case was submitted by Durham Tees Valley Airport to
support its application for a grant of £5m from the Local Growth Fund
towards the cost of providing the infrastructure referred to in your
e-mail.    This business case was independently assessed by the team
of professional consultants engaged by Tees Valley Unlimited as part
of the due diligence process.   Due to reasons of commercial
confidentiality and receipt of professional advice I cannot provide
you with either the Business Case or Due Diligence Report.

 

 2. The grant is subject to conditions that relate to:

 

i)                    Evidence of match funding towards the cost of the
road/infrastructure.

ii)                   Evidence of updated cash flow projection.

iii)                 Completion of a legal charge.

iv)                 Satisfactory Title Report.

v)                  Opinion on State Aid.

vi)                 Detailed site investigations.

vii)               Pattern of annual allocations of LGF.

viii)              Securing detailed planning consent.

ix)                 Meeting of Milestones

 

 3. There is no provision for a share of future profit should that arise
as the award is a grant and not a loan or equity.

 

 

 

Regards

 

 

Stephen Catchpole

Managing Director

 

 

 

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Dear Tees Valley Unlimited,

Please pass this on to the person who conducts Freedom of Information reviews.

I am writing to request an internal review of Tees Valley Unlimited's handling of my FOI request 'Business case by Durham Tees Valley Airport for £5 million grant'.

You have refused to release any information regarding the business case for this grant nor the due diligence associated with it. I contend that there is an overriding case of public interest here. The £5 million is public money and it is being given away with no financial strings attached. The purpose of the grant is said to be to "assist" in the building of a 1.8 km access road from the north to the south side of the airport. The issues raised and which the public have the right to examine are:

- £5 million for 1.125 miles of road is excessive. this is £4,444 per linear metre. Current estimates for a normal single carriageway road are between £1,200 and £1,500 per linear metre. It is important that the public understands why this road is so expensive.

- The access road will open up land for development that has a current planning consent for 1.9 million square feet of mixed commercial development. Any normal financial institution would not give a grant but would look at the purpose for which the request for money was made and either give a loan, with interest, possibly rolled up until the first development is completed and becomes income producing; it would then charge a healthy finance discharge fee to reflect the risk taken; or it would loan the money in return for a share of the profits from the development. The gift of £5 million means that the public pays for the road but Peel gets all the benefit of any development profits. It is important that the public understands why this grant was approved with no financial strings attached and this should be apparent from the business case.

- The grant is being given to support a road proposal that is the worst of a number of alternatives. This road is squeezed between the east end of the runway and the railway line, so close that traffic lights are needed to enable aircraft to land and take off safely. It envisages using the existing airport access from the A67. That single carriageway road will have to carry traffic to and from any development on the north side of the runway, including residential traffic from 400 houses, as well as all the traffic generated by 1.9 million square feet of property on the south side. There is a road that abuts the airfield boundary on the west and there was a much better access proposed in the original south side planning consent which came in directly from the A67. It is important that the public sees the reasoning behind the choice of this inferior access road route.

- The "matching investment" proposed seems to be an offer by Peel to build a 35,000 sq. ft. shed on the south side. This shed will, of course, be owned by Peel and they will get the benefit of any income derived from it. Peel could, however, have built this shed, and indeed several more, on the north side, and no access road and therefore no grant would be needed. Peel could then use the profits to build the access road at no cost to the public purse. Indeed, some of the £25 million generated by Peels hope-for housing development on the north side could be used to build the road at a later date.

I do not understand why the information should be confidential especially as it is public money that is being given away. Is it that Peel is ashamed to tell us, or that TVU is frightened that when we have the facts we might come to a different conclusion? If the case made for the grant was a good one, if the due dilligence was carried out properly and if there are genuine reasons why we shouldn’t get our money back or have a profit share from the proceeds from the 1.9 million square feet of development then there should be no reason why we can’t be given the information. Keeping it secret only leads everyone to believe that there might be something wrong. It is important that the public sees the justification for Peel needing the grant at this stage rather than generating profits from development on the north side and building the access road later.

I hope you will reconsider your refusal to release the information requested because as you can see there is an overriding case for public interest.

A full history of my FOI request and all correspondence is available on the Internet at this address: https://www.whatdotheyknow.com/request/b...

Yours faithfully,

G. Stapleton

Carter, Irene, Tees Valley Unlimited

2 Attachments

Mr Stapleton

 

We acknowledge receipt of your email of today which is receiving our
attention.

 

 

Stephen Catchpole

Managing Director

 

 

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Bond, David,

This email was classified as : OFFICIAL

 

Dear Mr Stapleton

 

Your request for an internal review of Tees Valley Unlimited’s (“TVU”)
handling of your FOI request has been passed to me for consideration. 

 

Please accept my apologies for the delay in responding to your request for
an internal review.  It has taken longer than anticipated to undertake the
review and to finalise the outcome.   No discourtesy was intended. 

 

The review has, however, now been concluded and I am, therefore in a
position to provide you with details of my findings. 

 

TVU dealt with your request for information for, and on behalf of Stockton
Council.  I am the Council’s Monitoring Officer. 

 

I did not have any dealings with the original decision by TVU regarding
your request for information, and I have assessed your complaint about the
handling of that request in order to determine whether the Council has
complied with its duties under the Freedom of Information Act (“FOIA”)
and/or the Environmental Information Regulations 2004 (“EIR”).

 

You submitted the request for information to TVU on the 3 November 2015
regarding a grant of £5M to DTVA to enable a road to be built from the
north to the south side of the Airport. 

 

You asked what safeguards or other conditions were included in the award
of the grant, and whether there was any profit share or clawback
provisions that would allow the grant to be recovered from future profits
from the land on the south side. 

 

In a response of the 4 November 2015, TVU provided details of the
conditions to which the grant was subject, and confirmed that there was no
provision for a share of future profit. 

 

I consider that these were satisfactory responses to the questions you
asked. 

 

You also asked to see the Business Case submitted by DTVA to justify the
need for a grant and the Due Diligence Report relating to the Business
Case. 

 

The request for this information was refused by TVU “due to reasons of
commercial confidentiality and receipt of professional advice”.

 

On the 5 November 2015 you submitted a complaint about the refusal to
provide a copy of the Business Case and the Due Diligence Report, and
requested an internal review of that refusal.  In particular, amongst
other points, you indicated that “there is an overriding case of public
interest here”; and that “it is important that the public understands why
this grant was approved with no financial strings attached…” ; and that
“it is important that the public sees the justification for Peel needing
the grant at this stage, rather than generating profits from development
on the north side and building the access road later”.

 

The refusal by TVU referred to “reasons of commercial confidentiality and
receipt of professional advice…”  There was no direct reference to any
specific section of the FOIA and/or the EIR or the application of any such
section to the information requested. 

 

Having considered your original request for information, the refusal
decision by TVU, the Business Case submitted by DTVA and the Due Diligence
Report, I nonetheless consider that the refusal is justified on the basis
of the application of the following: -

 

Section 41 of the FOIA and Regulation 12(5)(e) of the EIR; and Section
43(2) of the FOIA, to the withheld information. 

 

Section 41 of the FOIA and Regulation 12(5)(e) of the EIR

 

Section 41(1) of the FOIA states that: -

 

“Information is exempt information if –

 

(a)    It was obtained by the public authority from any other person
(including another public authority), and

(b)   The disclosure of the information to the public (otherwise than
under this Act) by the public authority holding it would constitute a
breach of confidence actionable by that or any other person”.

 

As section 41 is an absolute exemption, it is not subject to the public
interest test under the FOIA.

 

In relation to (a) above, the Business Case information was provided to
TVU by DTVA and/or the Peel Group, and as regards the Due Diligence Report
information was provided to the organisation undertaking the assessment
(“the Assessor”) by DTVA and/or Peel and by the Assessor to TVU. 

 

In considering whether disclosure of any of this information constitutes
an actionable breach of confidence I have taken account of the following
factors:-

 

(1)    Whether the information has the necessary quality of confidence;

(2)    Whether the information was imparted in circumstances importing an
obligation of confidence and

(3)    Whether disclosure would be an unauthorized use of the information
and to the detriment of the person or organisation providing it

 

As regards (1), the information (the Business Case and the Due Diligence
Report) manifestly has the necessary quality of confidence.  It is
commercially sensitive, not otherwise accessible publicly and is clearly
non-trivial.  It is information that is a key part of DTVA’s/the Peel
Group’s plans for the future of the Airport business. 

 

TVU/the Council has handled the information in a way that ensures that it
is maintained securely and that it is not otherwise accessible or
available in the public domain. 

 

In respect of (2), the information was clearly communicated in
circumstances importing an obligation of confidence. 

 

The documents had been explicitly marked to this effect. 

 

In relation to (3), the disclosure of the information would not represent
an authorised use of the information and would cause a clear detriment to
the financial and commercial interests of DTVA/the Peel Group and would be
detrimental to the Assessor.  It is likely to undermine the shareholding
local authorities’ ongoing working relationship with DTVA and the Peel
Group and consequently have an adverse impact upon the Council’s and the
other Local Authority shareholders’ negotiating position with DTVA and the
Peel Group and consequently limit and/or rule out future options currently
open to the local authorities for retaining a viable airport in the Tees
Valley.  The disclosure of the information would in addition be likely to
undermine TVU’s/the Council’s working relations with the Assessor  and
with future similar Advisers, if information in the form of professional
advice provided in confidence, was to be made publicly available.   This
would be to the clear detriment of TVU/the Council and to the localities
served by the Council and the other Local Authority Shareholders. 

 

I am therefore satisfied that disclosing the information or using it for
any purpose other than for which it was provided (ie to enable the grant
application to be considered and determined) would constitute an
actionable breach of confidence. 

 

It is not considered that there would be an arguable defence of disclosure
being in the public interest in this case.  Although it is accepted that
the public should be provided with sufficient information to enable it to
understand what has been approved, and why, insofar as the development of
the Airport and the Airport business is concerned, it is clearly in the
public interest for TVU/the Council and the other local authority
shareholders to secure a viable Airport business for the benefit of the
area and the communities they serve.   This requires that the
relationships of trust between the various parties involved in both the
public and private sectors remain intact.  The undermining of that trust
which would result from a breach of confidence, by disclosing information
provided confidentially, would be likely in turn serve to undermine the
implementation of the development for the Airport.  Accordingly, the
public interest in maintaining trust in this case very much outweighs any
perceived interest in disclosure.   The former must override the latter.

 

Regulation 12(5)(e) of the EIR

 

Regulation 12(5)(e) provides as follows:-

 

“12.-(5) For the purposes of paragraph (1)(a), a public authority may
refuse to disclose information to the extent that its disclosure would
adversely affect-

 

(e) the confidentiality of commercial or industrial information where such
confidentiality is provided by law to protect a legitimate economic
interest”.

 

The application of this provision to a particular case has been guided by
a four stage test in the following form:-

 

(i)                  The information in question is commercial or
industrial in nature.

 

The information relates to the development and implementation of the
future plans for the Airport, and thereby to the economic prosperity and
prospects of the sub-region.   This information is therefore clearly
commercial or industrial in nature. 

 

(ii)                Confidentiality is provided by law. 

 

It is considered that the same arguments as set out in relation to Section
41 of the FOIA confirm that the information is held in confidence. 

 

(iii)               The confidentiality is protecting a legitimate
economic interest.

 

TVU/the Council (and the other Local Authority Shareholders) have a
legitimate economic interest in ensuring so far as possible, the best
possible outcome for the future of the Airport in terms of the Council’s
shareholdings and the overall economic prosperity and prospects of the
sub-region. 

 

(iv)              The confidentiality would be adversely affected by the
disclosure. 

 

Disclosure of the information would be detrimental to the commercial
position of DTVA/the Peel Group and thereby the Councils in seeking the
best outcomes for the Airport.  A loss of the confidentiality would leave
TVU/the Council (and the other local authority shareholders) in a
disadvantaged position in terms of obtaining future confidential advice
and when in negotiations with the DTVA and the Peel Group. 

 

As regards the public interest, it is arguable that disclosure of the
information would increase public trust in the Council’s decision making
and DTVA/the Peel Group’s plans, by explaining to some extent the current
position of the Airport and its possible future.  Disclosure would also
inform the public of the financial position of DTVA, the airport and the
Peel Group and the costs to taxpayers.  This would allow greater public
participation, in that the public would have greater information with
which to understand and question options available for the Airport’s
future.

 

TVU’s/the Council’s position however is that if the information were to be
disclosed at this stage, its professional standing with prospective
Advisers like the Assessor, and its commercial negotiating position with
the DTVA/the Peel Group would be undermined, which could lead at the very
least to the Council not achieving the best possible commercial and
economic outcomes for the Airport.  Such consequences are not in the
public interest and ultimately are detrimental to tax payers.  There is a
stronger public interest in ensuring that the Council can continue to
negotiate on equal terms with DTVA/the Peel Group.

 

I agree with TVU/or the Council that insofar as the information requested
relates to environmental information, the exemption in the EIR is made
out. 

 

Section 43 of the FOIA

 

Section 43(2) of the FOIA states that information is exempt information if
its disclosure under the FOIA would, or would be likely to, prejudice the
commercial interests of any person (including the public authority holding
it).  In this context, “would be likely to prejudice” means that there
must be a real and significant risk of prejudice, which is substantially
more than just a remote possibility. 

 

It is considered that given the nature of the information, there is a
clear risk of prejudice being caused to DTVA and the Peel Group, and their
commercial interests in the development of the Airport Business, if the
information was disclosed.   This is turn would represent a real and
significant risk of detriment to the commercial interests of TVU and/or
the Council and the other Local Authority shareholders in securing a
viable Airport business for the future, for the benefit of the Tees Valley
and its economy. 

 

I consider in this case, that this is more than just a remote
possibility. 

 

As with the previous considerations relating to the FOIA and the public
interest in disclosing the information, it is considered that there is a
much stronger public interest in not disclosing the information as
disclosure would be likely to significantly commercially disadvantage
TVU/the Council (and the other local authority shareholders).  Allowing
such prejudice to occur would be counterproductive both for the Council
and the public at large, as the disclosure of such information would
undermine the options available to the Council for securing the future
viability of the airport, which would in turn be detrimental to the public
interest. 

 

As previously referred to, however, there is clearly public interest in
ensuring that sufficient information is available to enable the public to
understand what has been approved and why, insofar as the development of
the Airport business is concerned.  Information about the decision that
has been made regarding the grant application is required to be published,
and I have, therefore recommended to TVU that this is done as soon as
reasonably practicable.  This will go some way towards assisting the
public to understand what decision has been taken and why. 

 

Yours sincerely

D.E. Bond

Monitoring Officer

 

 

 

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