Spotlight on the grant and loans which meant £2.8m of public money went to a Norfolk company

Spotlight on the grant and loans which meant £2.8m of public money went to a Norfolk company

Norfolk firm Pasta Foods has been handed almost £3m in a grant and two separate loans from the New Anglia Local Enterprise Partnership (LEP) in just two years. But do the deals represent good value for money and should the taxpayer effectively be asked to step in and help a private firm in such a way? Investigations editor David Powles reports.

Pasta Foods at their new site at Forest Way, Costessey. Picture: DENISE BRADLEYPasta Foods at their new site at Forest Way, Costessey. Picture: DENISE BRADLEY

In its efforts to establish a new factory on the outskirts of Norwich, the Norfolk company has received a grant and loans totalling £2.8m 
from the public purse, we can reveal today.

The firm, whose main base is in Yarmouth, was handed a £500,000 grant by the LEP in 2013 to help towards its expansion into a factory at Forest Way, Dereham Road, Costessey, which it claims will bring at least 50 jobs and protect 140 more.

The LEP also made a further £1.6m available as a loan in 2014, which has since been paid off, and has just approved a £750,000 loan, of which so far just a third has been utilised, so the project can be completed.

Both the LEP and Pasta Foods say the grant and loans represent good value for money as they will bring jobs and investment to the county and have enabled it to unlock further investment.

Chris StarkieChris Starkie

But the deals do raise questions as to what extent public money should be used to aid the private sector.

While the LEP would not reveal the APR on the loans, Chris Starkie, its managing director, said robust checks and procedures were in place.

He said: “Our team regularly monitors progress on all of our projects to ensure they are on track and the money is spent appropriately.

“We negotiate to take charge of any assets which could be reclaimed if the loan is not repaid. The LEP costs and legal expenses are also paid by the company as part of the loan agreement.”

Pasta Foods has been in production since 1964, employing hundreds at its main Yarmouth base. It received the £500,000 grant via the Growing Business Fund, which provides cash up to 20pc of total project costs.

The loans were part of the Growing Places Fund, which aims to provide loans to capital projects where other finance is either not available or does not cover the full amount required. Ten loans have been issued so far, two to Pasta Foods.

So far 23 staff have been recruited for the Norwich site, with the promise of more to come. Mr Starkie added: “These funds support small, medium sized enterprises like Pasta Foods, to help them invest, create more jobs and grow their business. It also supports bigger infrastructure projects.

“So far the LEP has supported over 100 business across Norfolk and Suffolk via our Growing Business Fund, and around £17m has been invested in projects through the Growing Places loan fund.

“Importantly the LEP investment serves to unlock further private or public investment, which would not normally be available without our financial support.”


Alex Wild, research director of the TaxPayers’ Alliance, said: “The government shouldn’t be picking winners and risking taxpayers’ money in the process whether it’s through Whitehall departments or more locally. While we don’t know the interest rates on these loans, it’s safe to assume they’re on more generous terms than would be offered by commercial lenders.

“Unfortunately we have a highly centralised tax system in the UK and councils have no say over the level of Business Rates they have to collect on behalf of the Treasury. A better policy approach would be to devolve more power to councils so they can compete with each other through the tax system rather than hand out quasi-bribes to nudge businesses into investing in their area.”


We put the following questions to Pasta Foods managing director Gordon Chetwood.

Q – What benefit has receiving LEP help given Pasta Foods?

A – This assistance has enabled Pasta Foods to create the capability to grow the business having reached capacity at our existing site in pasta production. Without the grant and loans the investment in the production line at Norwich would not have been possible. It is a class leading facility.

Q – What security has Pasta Foods been able to provide to ensure the money borrowed would be put to good use and paid back in full?

A – All necessary security has been provided to the LEP which is thoroughly vetted and approved by them. The first loan was repaid in full when the new production line was commissioned which was the agreed trigger for repayment. The second, small loan will be repaid in full from cash-flow. A commercial, market rate of interest has been paid by Pasta Foods to the LEP.

Q – Some may argue public money should be used to support private enterprise, but there should be a limit. What would your response be?

A – We are a long established business in Norfolk with a product portfolio and reputation that many businesses would wish for. We export to markets across the world because of our class leading products and innovation. We have significant aspirations for growth and business development in both Great Yarmouth and Norwich which will ensure long term revenue for the local economy and would strongly argue that the support provided is not too much. The LEP grant and loans have been crucial in creating a world class facility in Norwich. Without the funds it would not exist.

Q – What reassurance can you give to the public that these loans have represented good value for money?

A – The support provided has enabled Pasta Foods to establish a position for long-term business growth ensuring employment and career opportunities for the local work force.


The former MD of Pasta Foods and a current director, Peter Barry, was joint chairman of the board set up to establish the LEP in 2010.

We asked if he still held a role within the LEP and how it ensured there was no conflict of interests.

The LEP replied: “Peter Barry was joint chairman of a board which was set up to establish the LEP in 2010. He stood down from that role when the LEP was formally established in Spring 2011.

“He does not hold a role within the LEP, and was not involved in any of the decision making for the loans or the grant, or the setting up of the overall funding programmes.”


The LEP has handed out ten loans as part of the Growing Place Fund. Applications for a further 13 have been turned down, though the LEP would not reveal who had bid for them. The loans, totalling £17.45m, were:

Ipswich Flood Defences £6.6m

Kings Lynn Innovation Centre – £2.5m

Pigeon Investment – commercial development on Barton Mills Roundabout on the A11 – £500K

Hopkins Homes development on the North Walsham former HL Foods Site – £2.4m

Haverhill Innovation Centre – £2m

Kesgrave Hall – conference and entertainment venue £300K

Pasta Foods £1.6m

Pasta Foods £750K (only part drawn-down)

Norwich City Council – for work on the Aeropark – £80,000


this news story was provided by Great Yarmouth Mercury

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