Leader Observatory Seminar The Legacy of Leader at local level: Building the future of rural areas 2

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Leader Observatory Seminar The Legacy of
Leader at local level Buildingthe future of
rural areas24-26 April 2007Cap Corse, Nebbiù è
Custera, Corse, FRANCE
European Commission

• Mini-plenary C - Case Study
• LEADER FINANCIAL SUSTAINABILITY, The Lessons
  Learned
• Alec Miller, Northern Isles LEADER Partnership,
  UK

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LEADER in the Northern Isles

• Northern Isles comprise the Orkney Shetland
  Island Groups, the most Northerly part of
  Scotland. The islands are nearer to Oslo, the
  Capital of Norway than we are to Edinburgh, the
  capital of Scotland!
• The area is peripheral with a total population of
  only 45,000 spread over about 30 small islands
• The LEADER theme is New Technologies Know How
• Target groups are Young People, Women, Micro
  Businesses (including Social Enterprises)
• This presentation will provide the background to
  two of the projects funded by our LAG will
  conclude by identifying the key factors that have
  resulted in these projects achieving a route to
  long term financial sustainability

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Background to Case Study (1)The Assessment
Process

• In 2003 LEADER part funded the development of a
  Community Portal in the Orkney Islands with the
  aim of encouraging voluntary organisations to
  make effective use of the web for promotion,
  information and training.
• The initial proposal identified that the project
  would require to establish commercial streams of
  income if it was going to survive after the end
  of 3 years of support from LEADER and other
  agencies.
• Using their knowledge of the sector, the LAG
  members considered that there was strong
  potential for the project to meet its targets and
  the initial funding was agreed on the basis that
  a detailed business plan, demonstrating long term
  sustainability, would be developed in year 2
  based on the practical outcomes achieved in the
  first 18 months of operation.
• In year 2 the business plan was prepared as
  agreed based on their trading successes
  failures, the Community Portal management
  committee identified future sources of income
  that would enable the project to continue after
  the end of LEADER funding
• The LAG assessed the Business Plan as having good
  potential and encouraged the group to proceed
  with their future development plans

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Background to Case Study (2)The Assessment
Process

• Based on the remote Shetland Island of Unst, the
  innovative PURE Project, a community enterprise,
  has used the skills of young local engineering
  graduates to develop the technology to use wind
  energy to create hydrogen fuel cells that can be
  used to fuel electric vehicles or provide
  domestic energy.
• LEADER has supported the fledgling project
  during the development phase with funding towards
  pilot projects.
• A key factor in supporting this project was the
  fact that the project promoters had a strong
  track record of delivering successful projects
  and while this project was outside their previous
  experience, they had recruited a core of young
  engineers who were committed to the future of
  their Island and were willing to demonstrate this
  commitment by working on the project for minimum
  wages during the development stages.
• The project has now developed to the stage that
  it has produced a viable business plan, which has
  been accepted by funders. This plan will result
  in the creation of a Hydrogen Energy Centre on
  the Island. This centre is projected to have a
  turnover of 700,000 euros within 3 years, selling
  its expertise to local authorities, universities
  and a range of isolated communities pursuing the
  principle of local energy production for local
  consumption.

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DIAGRAM of PURE SYSTEM
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The PURE Energy System
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Key factors in creating economic viability for
projects -

• After 3 years of Leader funding both projects
  have reached a position where they are able to
  identify services that can provide them with
  future economic viability
• CASE STUDY (1)- Fees paid by voluntary groups
  for hosting web sites sale of advertising space
  on the portal Fees from public agencies for
  hosting public consultations and surveys. Future
  ideas are a web design service the development
  of a similar style portal targeted at the small
  business sector
• PROJECT (2)- Sale of patented Hydrogen
  production units Provision of training courses
  Research and demonstration programmes New
  product development

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Do the projects drive other economic activity ?

• PROJECT (1) has resulted in the voluntary groups
  involved in the project having to take a
  commercial view of income generation in order to
  enable the project to survive. It is also
  interesting that the voluntary sector are looking
  at using the skills developed within this project
  to provide a similar service to local small
  businesses.
• PROJECT (2) which was established by a community
  business has developed skilled high value jobs in
  a remote community. The separate company that has
  now been established to operate the expanding
  business will pay a dividend to the original
  community business which will use the money to
  fund further community regeneration projects.

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How to ensure economic viability ?

• During the application/assessment process, our
  LAG does request projects to consider their exit
  Strategy on completion of LEADER funding. If the
  project has potential for economic viability, the
  LAG will use its wide network of contacts
  skills to assist the project to develop its
  business plan.
• In the example of CASE STUDY (1) LEADER funding
  was agreed for 3 years on an annually reducing
  basis, thus ensuring that the project had to
  become commercial in order to survive
• In the case of CASE STUDY (2), over several
  years, the LAG was supportive of pilot projects
  which helped the project to generate some
  additional income sources during the research and
  development period, and LEADER also part funded
  the specialised final business plan
• An important tool in ensuring viability, is for
  the LAG to maintain close contact with the
  projects, offering further support, not
  necessarily financial, if required. Perhaps, the
  delivery of this additional support is less
  difficult for a LAG based in an area with a small
  population and strong networks.
• Finally, while we must be realistic and accept
  that not all LEADER projects will go on to be
  economically viable, LAGs must have systems in
  place to ensure that good projects are clearly
  identified and adequately supported.