Select Committee on Trade and Industry Minutes of Evidence

Examination of Witnesses (Questions 1 - 19)




  1. Good afternoon, Mr Irwin. I would like to welcome you to the Committee. We realise your organisation has been underway for some time now but we felt it would be better to give you a chance to prove yourself or have a record that we can examine before we had you in, so we are very pleased to welcome you. Perhaps you could introduce your colleagues and then we will start.

  (Mr Irwin) Thank you. On my right, Peter Waller, who is my Deputy Chief Executive. On my left, Haf Merrifield, who is responsible for our network development, which is largely the Business Link network throughout England.

  2. Thank you. Perhaps we can start with the fundamentals, not quite pay and rations but rations anyway in terms of Government funding. We now have the increased flexibility afforded by three year financial planning. I suppose the downside of that is that the annual funding did afford a degree of flexibility and if something changed dramatically within the period of 12 months you could draw down resources by arguing the case, whereas now it is over three years, and in some respects as a new organisation you were really going on a wing and a prayer as far as what your needs might be. How have you found the level of funding over the experience of the first year? Have you been able to live within it?
  (Mr Irwin) Perhaps I should also explain that I have come in from an outside organisation, so not only is the organisation new but I am new as well. I am not a civil servant, I have come in from an Enterprise Agency, so I have been having to learn a lot about both how the Civil Service works and how Government funding works. For the first year I inherited a budget of a little under £320 million, for programme expenditure, and it is fair to say in the first year we did not spend everything we had, partly because we were trying to ramp up some of the activity. For the year we are just starting, I have a budget of about £370 million. We actually did quite well out of the Spending Review, and in particular are able to put extra money into the Business Link network which we thought was important after the demise of the Training & Enterprise Councils. I am confident that the money we have for programme expenditure will enable us to do the things we would like to do over the next two or three years. There are always more things we could be doing. We have no shortage of ideas for extra things but we hope to do all the important things.

  3. Have you seen additional priorities which 12 months ago you had not thought of and you are now saying, "Gosh, if we had put in for that money we might have been able to spend it on this because it is important"? Have you identified any priorities which have emerged in the last period which you feel additional funding would enable you to give proper treatment to?
  (Mr Irwin) It may be helpful to talk about some of the things we are intending to do rather than some of the things we would like to do as extras, but yes, of course, there are extra things we would like to do. One of the extras is to develop more incubator work space. We were successful in some negotiations prior to the publication of the White Paper to be able to set up a fund to assist with the development of more incubator work space. Some of the other areas where we have identified there could be scope to do work are areas where we are hoping to work-up ideas. It is not as if we want to suddenly spend tens of millions on any programme, but we have no shortage of ideas for new things which we would like to be considering because we think we could have a role. One which is topical is the proposal from Ronnie Cohen's Social Investment Task Force for community development venture funds, intended to put some extra resources into disadvantaged areas both to work directly with business but also provide support for infrastructure.

  4. We will perhaps come back to that in a minute. Has the transition from the old Business Link system been a painful experience?
  (Mr Irwin) Haf is nodding, so it must have been.

  5. I realise Ms Merrifield is here and she may be able to comment as well. It is fair to say that the system has had a lot of conflicting demands made of it over a comparatively short period and in some respects the imposition of SBS is only the last of many—maybe the latest of many. How has this gone? We have looked at Business Links in the past.
  (Mr Irwin) As you know, the Small Business Service is about far more than just the Business Link network, but the Business Link network has been an important part of our delivery system, working with new and growing businesses throughout England. Many of the decisions in terms of what was going to happen had already been determined before the creation of the Small Business Service, before I was in post, but it was a very necessary transition to go through. Some Business Link operators were very good and had a good reputation and their clients thought very highly of them, but I think it is fair to say that some did not quite meet those same standards of excellence. We were determined we should use the opportunity to try to raise the quality. We also, with the ending of the arrangements with the Training & Enterprise Councils, wanted to reduce the numbers of Business Links, so we moved from 81 to 45. We went through a two-stage process. We invited all of the existing partners to bid for contracts without any competitors but against a very tough set of criteria. We only accepted 32 of those propositions. The other 13 went to open competition. We now have a network to cover the entire country. It is fair to say it has been a fairly traumatic process but we are determined as a result, to raise the quality. We also think having a smaller number will ensure we have less resource in the back office, as it were,and far more happening in the front office, far greater customer focus. We are doing our very best to encourage the Business Link operators that they really must listen carefully to the customers all the time. We are trying to give more flexibility so instead of giving almost penny packets of funding to different programmes we are agreeing to buy into a business plan, so that the Business Link operators are telling us what they want to do and we are agreeing with them and then giving a contribution towards that work.

Ms Perham

  6. I have some questions on Business Links. How long are the franchises which you have given, the 45 franchises?
  (Mr Irwin) They are three year rolling contracts. Provided Business Link operators continue to meet our criteria, they know they will have a contract on a rolling basis for the next three years ahead.

  7. You mentioned before with the Area Business Links the service was patchy, are you going to come up with any kind of benchmarking or standards monitoring, maybe an inspectorate, to look at how they are running and ensuring they have a good standard across the country?
  (Mr Irwin) Yes, we are. We are doing a number of things. Firstly, we are requiring that Business Link operators should use the Excellence model to give them a framework for their quality improvement and also they should be recognised as Investors in People. Indeed many of the organisations with contracts are already so recognised. Secondly, we have completely reviewed the standards for both business advisers and the staff working directly with clients, so they are now far more process-consultancy orientated. We have also changed the way advisers work so they will act far more as a facilitator with the client, far more as a process-consultant, working with clients to look at long-term objectives, identifying and putting together organisational development plans and bringing in the most appropriate expertise from wherever that exists, rather than necessarily trying to do everything directly themselves. We are going to be for the first time assessing all the advisers against those new standards and creating a corporate university, if you like, a business school for business support, in an effort to achieve a quantum leap in the quality of service which is being delivered.
  (Ms Merrifield) The only other thing I would mention is that we have for the first time got a team of full-time regional managers recruited openly, the majority from the private sector, who will be working with the network to make sure good practice is exchanged between the different areas, but also to monitor the delivery of the standards under the contract we have with them and the business plans which we have agreed with each Business Link as part of their contract.

  8. What will your relationship be with the LSCs now? You mentioned earlier the TECs have gone and the LSCs have come back, how will your relationship be with them as opposed to if the other system had continued?
  (Mr Irwin) We are hoping there should be a very close working relationship between the Business Link operators and the local LSCs. They are already contracting with the Business Links for the promotion of work force development in general and Business Links will be delivering on their part the Investors in People standard.

Mr Butterfill

  9. The British Chambers of Commerce have said to us that there has been quite a lot of delay and confusion about these contracts, that in some areas it is fairly inconsequential but there are some more fundamental problems with some. Indeed we are in a situation where some of the contracts remain to be negotiated, in part at least. What have you learnt from all of this?
  (Mr Irwin) I guess we have learnt that perhaps we should have devoted a bit more time and started a bit earlier with some of the contracting. I think a lot of the negotiations have been the typical commercial negotiations you would expect. We have not got a command and control system here, we have been inviting what to all intents and purposes are independent, autonomous organisations, albeit in almost every case not-for-profit organisations, to be delivering work on our behalf. Of course you would expect some fairly robust negotiations about the contracts.

  10. Did you under-estimate the difficulty or complexity and did you have too short a timetable allowed for it, with the benefit of hindsight?
  (Mr Irwin) One of the lessons is perhaps we should have allowed more time. It is also fair to say that there were some issues where the Business Links operators were particularly asking us for extra help and we wanted to respond, we wanted to provide that extra help, but that actually added to the complexity of the contract. Perhaps, again in hindsight, we should have kept the two issues separated.

  11. Are you now considering the establishment of a negotiating committee to represent the franchisees in these negotiations?
  (Mr Irwin) We have undertaken that we will continue during the first quarter of the financial year to review the contract and we are due to have the first meeting tomorrow afternoon.
  (Ms Merrifield) In terms of the 45 operators coming together in some sort of representative structure to negotiate with us on behalf of the network, that is certainly something which we have said throughout the process we would positively encourage and be prepared to support. It has taken a little time for them themselves to get key staff in place and develop those relationships between themselves and decide how they want to take that forward, but I believe they are now at the point of setting a structure in place and we would be happy to support that.

  12. It would be a much simpler way rather than trying to have lots of separate and disparate negotiations.
  (Mr Waller) I tried to facilitate a meeting with them in September, something like that, but they were just not ready. Some of these were new organisations which, particularly where the boundaries have changed, only formally came into full operation on 1st April, so they have had all the internal transition issues to go through as well. So they were not ready for it earlier, but in the future we will certainly end up with an ability to negotiate through a central point I am sure.

  13. You have probably suffered from the fact they were pretty diverse in their structures, some very sophisticated and others perhaps not quite as sophisticated.
  (Mr Waller) I think that is fair, yes.

Mr Baldry

  14. You have an Information and Advisory Service which, as I understand it, is going to be the way in which you are going to communicate with most small businesses. Is that right?
  (Mr Irwin) We have a call centre and a website.

  15. Yes.
  (Mr Irwin) I guess in sheer number terms, yes, that would be the single biggest channel, but clearly the most intensive support will be delivered through the Business Link network, through one-to-one support and assistance.

  16. What kind of feed-back have you had from consumers as to how the website is working at the moment?
  (Mr Irwin) We have been piloting the website over the last year or so since we came into existence. We have been running some focus groups, we have been inviting people to give us feed-back, and on the whole the feed-back has been extremely positive about the sort of information they have been able to get. The new website, the all-singing, all-dancing version, if you like, we expect to launch towards the end of this month. We will not be launching everything all at once but we aim to include discussion groups, because businesses tell us one of the best ways they get advice is from the peer-to-peer network, so we want to facilitate that through the website. We also want to have the ability to provide a call-back facility, because no matter how sophisticated we make the web service, there are inevitably occasions when people want something more. So if you want someone to telephone you, you will be able to click on that and as soon as the technology allows—and hopefully it is not too far away—we want a talk-through facility so through the same communications line you will be able to talk to someone at the other end if you want more information.

  17. Do people pay to access the internet through you? How do you get any return from customers or do you not? Is this an entirely free service?
  (Mr Irwin) The web service we offer will be entirely free.

  18. So you will have hit counters and try to work out how many people have accessed it?
  (Mr Irwin) We will. Actually we hope to be more sophisticated than that because we are also establishing a national client data base which will record information about all the clients who are coming through the Business Link network, and the same data base will record information about the people coming through the call centre and the people coming through the web service. So we hope to have a very comprehensive data base about the way in which the service is being used, about the clientele, so we can use that to develop services in the future, and also to offer other added value services. One of the things I would like to do is get more, if clients are willing to pay, financial information from clients so we can feed-back to them financial ratio norms so they can compare themselves against other businesses in the same sector. That will help them to manage their own business more effectively.

  19. Is the call centre also free?
  (Mr Irwin) Yes, it will be free. The aim of the call centre and the web service is, on the whole, to give basic information, to be part of our overall promotional activity and to encourage businesses to consider a one-to-one conversation with a Business Link adviser. Different Business Link operators will adopt slightly different models but my expectation is that on the whole the first couple of meetings will be free but after that we would expect businesses to be paying a contribution towards the cost of the service.

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