Government Support for Business - Business, Innovation and Skills Contents

4  Communicating and coordinating the support available

53. Throughout this inquiry, we heard that more work was needed to ensure that Government support for business was communicated effectively. The Department stated that this was a particular problem for smaller businesses, which "do not have the time or resources to go hunting for support and some report having found Government's offer confusing and difficult to navigate".[143] We heard about two approaches to improving business engagement with Government support: the use of Local Enterprise Partnerships (LEPs) and Growth Hubs to coordinate a response to local business needs, and the use of a single point of contact from Government to communicate national support schemes.

Local and national business support systems: the role of LEPs and Growth Hubs

54. Local Enterprise Partnerships (LEPs) "bring together public and private sector leaders in an area to provide strategic leadership on local growth priorities".[144] The Government stated that LEPs "play an important role in linking together national and local support for businesses […] by making sure that local priorities reflect the needs of businesses".[145] Similarly, Growth Hubs were described by the Government as "a local public/private partnership" which were "locally-driven and locally owned" but "monitored by Government to ensure they deliver a more coordinated business support landscape".[146] These Growth Hubs were in the process of being established in many areas as we took evidence, but the Department stated that these would eventually be "the key tool that LEPs have to bring together local and national business support".[147] We heard that there was therefore "quite a bit of onus" on the new Growth Hubs and LEPs to make the support offer effective as "those organisations are going to have to prove themselves to be knowledgeable and giving good quality signposting" to available support.[148]

55. A key criticism we heard directed at the local business support system was its variability. Although we heard that it was "good that people can focus on the businesses in their localities", this has resulted in a "patchwork that is not consistent across the country".[149] As a result, there was a "postcode lottery" of support provision.[150] Cathy Garner, Director of Strategy at Wave 2 Growth Hubs Programme, explained that many Hubs "have been going for less than a year", so were "variable across the country" as they were "at different stages of development".[151] For LEPs, it seemed that this variability was attributed to two causes: poor performance with insufficient arrangements for spreading best practice, and a lack of funding.

56. We heard from Naomi Clayton, Centre for Cities, that there were "various networks that exist to share best practice across the country" but little formal infrastructure to support them.[152] Matthew Cross, Invest in Bristol and Bath, suggested that "the Government's role is about that coordination and network advice".[153]

57. Our previous report on Local Enterprise Partnerships outlined our concerns about the future financial provisions for LEPs.[154] During this inquiry, the Department told us that, from 2013-14, each LEP received £500,000 per year, £250k of which must be matched locally.[155] As well as that core funding, the Department stated there was additional Government funding provided through: Growth Deals, Enterprise Zones, the Growing Places Fund and European Structural and Investment Funds.[156]

58. It was disappointing that many of the concerns we have heard previously about LEP funding have persisted. For example Mike Palin, the Executive Director for Strategic Economic Development, Liverpool City Region LEP, told us there was an issue with the total amount of funding available to LEPs which "immediately constrains what [LEPs] can do".[157] He suggested that this meant that LEPs had to be "more innovative [and] engage with the market better".[158] We agree with Mr Palin in that it is clear that, in the immediate future at least, increasing government funding within the existing resource allocation is unlikely and unrealistic. This puts the onus firmly on LEPs to be innovative and inventive in the ways that they raise resources.

59. Concerns about LEPs were stated most starkly by Stuart Garner from Norton Motorcycles, who told us that:

    LEPs are dead. It is a very slow, archaic organisation that doesn't act as fast as businesses need to.[159]

We therefore put this suggestion to the Minister, who disputed the assertion that the overall system was not functioning. However, he acknowledged that there were LEPs that "could be strengthened" and those that were "progressing incredibly well".[160] Given this inconsistency of performance, we were concerned that the Minister's vision for LEPs remained largely hands-off, even in terms of resources:

    There are LEPs that are highly innovative. There are LEPs that take a lower risk approach. This is part of the beauty of localism and is an inevitable part of asking local areas what their local needs for growth are. I do not think we should see those distinctions as a problem. We should see them as part of taking a local view.[161]

While we may not agree with the specific phrasing of Mr Garner's statement, it is clear that improvements need to be made to ensure a consistent and high level service is provided by LEPs across the country. The Government had a fundamental role in the formation of LEPs and now has a responsibility to support them when it is necessary.

60. The Government has a role in supporting LEPs to ensure they operate to a high standard across the board. The Government should step up its work in coordinating best practice amongst LEPs and Growth Hubs in order to make the most out of this system. We therefore recommend that Government makes specific commitment to raise standards across the LEP system, by undertaking an audit of both LEP's and Growth Hub's best practice, which should include an assessment of the extent to which limitations on available Government funding are responsible for poor performance. We further recommend that, where funding is an issue, and there are potential alternative sources available, the Government should encourage LEPs to be innovative in their efforts to secure further funding. The performance of Growth Hubs also needs to be monitored and assessed to ensure they are meeting the needs of businesses in their local area.

A single point of contact?

61. The Government has stated that its support for business is being reformed into "three simple offers" with "joined up marketing to increase awareness".[162] However, a range of evidence to this inquiry has indicated that the support landscape remains complex and difficult to navigate. For example, we heard from the British Bankers' Association that "businesses often are confused as to where to look for non-financial support and advice";[163] from Matthew McDonnell, Managing Director of Resimac, that "as a small business it would be a lot easier if there was maybe just one port of call",[164] as support at present was "fragmented";[165] from Naomi Clayton, Senior Analyst at the Centre for Cities, that "better co-ordination is needed",[166] and from the Federation of Small Businesses said that "much needs to be done to provide businesses with a more straightforward, effective offer".[167]

62. Given the complexity of the support landscape and the "alphabet soup" of initiatives on offer,[168] we questioned the Minister on where businesses should go to as a first port of call to find out about the support available to them. He told us that the Business Growth Service, set up in December 2014, should fulfil this function, as this new Service was bringing together:

    GrowthAccelerator, Manufacturing Advisory Service, IP Audit, Designing Demand and other schemes, and then hopefully at a local level through the Growth Hubs. It is precisely to bring together that plethora of schemes into one place.[169]

He went on to tell is that:

    Bringing it all together for domestic advice, with UKTI for international, is a really important step. With that, we then liaise with all of these different organisations, all of the main business bodies, all of the main banks, the accountancy firms and the law firms also, because they have an advisory role too, to make sure they know what Government support is available, if they think that is appropriate.[170]

63. There was clear demand in this inquiry for a single port of call that businesses could contact to be directed to the support that they required. The Government launched the Business Growth Service during the course of this inquiry, with the intention that this service would fulfil such a role. If the Business Growth Service can be developed into that single port of call, then it will be a valuable addition. If not, then it risks becoming another complication in an already intricate system. We have not seen evidence to suggest that there was an awareness amongst businesses that this service was being introduced. The Government has an obligation to make this new service valuable and effective. In its response to this Report, the Government should outline the steps it has taken, or will take, to ensure businesses are aware of, and make use of, the Business Growth Service.

143   Department for Business, Innovation and Skills (GSB 22) extract Back

144   Department for Business, Innovation and Skills (GSB 22) para 8.1 Back

145   Department for Business, Innovation and Skills (GSB 22) para 8.2 Back

146   Department for Business, Innovation and Skills (GSB 22) para 8.5 Back

147   Department for Business, Innovation and Skills (GSB 22) para 8.4 Back

148   Q14 [Ms Hopley] Back

149   Q174 [Dr Edge] Back

150   Q174 [Dr Edge] Back

151   Q61 Back

152   Q77 [Ms Clayton] Back

153   Q90 [Mr Cross] Back

154   Business, Innovation and Skills Committee, Ninth Report of Session 2012-13, Local Enterprise Partnerships, HC 598 Back

155   Department for Business, Innovation and Skills (GSB 36) extract Back

156   Department for Business, Innovation and Skills (GSB 22) para 8.3 Back

157   Q63 [Mr Palin] Back

158   Q63 [Mr Palin] Back

159   Q175 [Mr Garner] Back

160   Q392 Back

161   Q392 Back

162   Department for Business, Innovation and Skills (GSB 22) extracts Back

163   British Bankers' Association (GSB 17) para 4.4.1 Back

164   Q260 [Mr McDonnell] Back

165   Q264 [Mr McDonnell] Back

166   Q89 Back

167   Federation of Small Businesses (GSB 18) para 1.1 Back

168   Federation of Small Businesses (GSB 18) para 2.1 Back

169   Q407 Back

170   Q408 Back

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Prepared 24 February 2015