Lewisham London Borough Council, subsidy to Besson Street LLP

The Lewisham London Borough Council, subsidy to Besson Street is a proposed award of £12.2 million to Besson Street LLP (a joint venture between Lewisham London Borough Council (the “Council”) and Grainger Plc). This will be used to fund the delivery of one-hundred and fourteen affordable homes.

Our key takeaways from the Subsidy Advice Unit (SAU) report are:

• Where the Council plans to rely on a market failure argument the Assessment should clearly identify and set out what market failures are being addressed.
• Assessments should consider alternatives to the subsidy and explain why these are not appropriate (for example, other sites in the local area).
• Evidence should be provided to demonstrate how the subsidy will affect the overall financial viability of the project, rather than specific areas.
• Determining whether the total subsidy amount is appropriate to achieve the policy objective should consider:
  • explaining forecasting assumptions used and independent assessments of the viability gap;
  • discussing why any previous funding is not sufficient; and
  • benchmarking the size of the subsidy against the cost of the project, size of the relevant market and any relevant operating costs.
• Assessments should set out how each of the substantive and procedural SPEI requirements are met in line with the Statutory Guidance and indicating where any supporting evidence is.

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