Questions over £225k public cash given to New Forest business start-up hub
QUESTIONS have been asked by councillors about a New Forest business start-up hub which has failed to create a single apprenticeship after taking £225,000 of public money.
Paul Sherry, the man behind the entrepreneurial project known as 49 at South Efford House in Everton, admitted he had paid himself £34,000 in consultancy fees.
He also spent £36,000 on recruiting Mujeeb Rahman as a “director of innovation”, and £50,000 bringing in advertising company Cloud 10 to market the site.
A further £20,000 went on a business manager – who he did not name – and £10,000 on new “soft furnishings” for the building.
Appearing before New Forest District Council’s corporate overview and scrutiny panel, Mr Sherry said progress of the community interest company had been curtailed by the pandemic.
Insisting he was “delighted” with its start and that the site’s potential was “significant”, Mr Sherry highlighted how 49 helped the local response to the health crisis by hosting NHS midwifery services.
However, while telling the panel he was not there to ask for money, he later admitted it would likely need more funding in the next three to five years.
Committee chair Cllr Alexis McEvoy said: “There’s certainly a lot for the council to chew over.
“I appreciate Covid has made it a difficult environment. However, I am just disappointed. You had all of 2019 to deliver something and I am not aware of any apprenticeships created. It’s difficult to see a way forward when we are looking at taxpayers’ money.”
As reported in the A&T, 49 moved into the South Efford premises – which had been vacant since 2011 – on a 10-year lease in 2018 with a view to transforming it into a hub to provide flexible business workspaces, meeting rooms and company set-up services. It opened in January 2019.
NFDC said it awarded the project £75,000 of seed money, plus £150,000 from Hampshire County Council, totalling £225,000.
It was given half the money upfront and was told it would receive the rest for meeting targets in its first three years, including delivering 100 jobs and 50 apprenticeships, taking 60 businesses through an innovation growth programme and creating 30 start-ups.
However, when Mr Sherry appeared before the committee last week, he admitted it had not yet created a single apprenticeship, and no co-workers were there currently.
Around 20 start-ups with 26 jobs were there, but they all moved out when Covid-19 hit and have not yet returned. He added eight businesses were currently based in the offices, alongside the NHS staff.
He admitted it may not make its targets within the three-year period but suggested the timeframe should be delayed because of Covid.
Mr Sherry claimed to members he had a “deal in the pipeline” in January that would have brought the site to “100% capacity” but Covid-19 had intervened.
He also said he had only received £150,000 of seed money – which NFDC planning chief Claire Upton-Brown challenged, insisting the council’s figure of £225,000 was correct.
Mr Sherry stressed he had invested his own money to get the scheme off the ground, adding it was inspired by a social project connecting youngsters with jobs and apprenticeships.
He said when Covid hit, 49 had adapted to host NHS Southern Health Foundation Trust maternity services. Now it was doing other clinical work there, such as blood tests, and was interested in expanding further.
Mr Sherry suspected the site might need £400,000 in the coming years, adding he was intending to find funding from local, regional and national sources as well as private investors.
While some members were impressed with his presentation, others had questions. Cllr Alan O’Sullivan highlighted the site was currently losing more than £10,000 a month, and wondered how that figure would be made up.
Mr Sherry admitted: “I personally can’t take much more pain. I cannot continue to support it but I am not here coming for a bailout.”
Cllr Mahmoud Kangarani pointed out Mr Sherry had not produced figures as to how 49 compared with similar business hubs in the New Forest in terms of how it had coped amid coronavirus.
“You say you are not asking for money, but then you ask for money,” Cllr Kangarani said.
“I am certainly not here making excuses,” Mr Sherry insisted, adding he was “sharing the reality – warts and all – of the situation”.
He also admitted he was asking for cash, but not right now, and “would like to think” he was doing so “in a slightly different, nuanced way”.
Mr Sherry explained the name 49 came from the latitude of the site being subtracted from the longitude.