Government Support for Business - Business, Innovation and Skills Contents


5  Conclusion

64. Our inquiry looked over a broad range of Government business support initiatives. We found positive feedback about many aspects of this support offer, with expectations of further positive developments as institutions such as the British Business Bank, Green Investment Bank and UKTI continued to develop their role. We heard about increasing "confidence" and "aspirations" amongst businesses, which were slowly "beginning to translate into more growth, investment and job creation".[171] However, the Government has stated that "more can be done" to improve the support it offers to businesses.[172] We agree. The Government should be working to ensure its support efforts better serve the 4.9 million SMEs which make up such a significant part of the UK economy, by working to reduce the complexity of the support it offers and increase its stability.

COMPLEXITY AND POLICY DESIGN

65. Despite moves towards simplifying the support landscape, there remain a large number of schemes, each with different objectives, eligibility, funding and contact points. Over 600 different schemes are currently advertised on the Government's website, covering different locations, different industries, and being supported by different funding sources,[173] where businesses need "consistency and rationalisation".[174] Furthermore, we heard that, in terms of organisation and strategy:

    This whole area is confusing at the moment. You have LEPs. You have City Deals. You have Growth Hubs. You have unitary authorities. You have district authorities. You have county councils. You have that plethora that is out there, without very much steerage or guidance. This is one of the problems that you have. Without some steerage and guidance, everybody is left with a free­for­fall, and nobody is undertaking a needs analysis, if you like, of what business needs and what support is already out there. Again, from our evidence, you are very clearly seeing duplication. You are seeing overlapping. You are seeing a waste of public sector finances.[175]

66. We also heard concerns about the extent to which these schemes were addressing the needs of business, with suggestions that a focus on narrowly defined outputs rather than broader business or economic outcomes was limiting their overall effectiveness.[176] For example, Dr Adam Marshall, Executive Director of Policy and External Affairs at the British Chambers of Commerce, told us that:

    So many business support schemes around the UK are let on contracts that specify output targets, and the chasing of those output targets becomes the be-all and end-all of the scheme. You will have great individuals working in those schemes trying to get outcomes for the businesses they are working with, but output targets still reign. That is a cultural problem of the square mile we are in here around Westminster and Whitehall rather than anyone else. Moving that focus would be helpful.[177]

67. The Department stated that measures to improve its policy evaluation processes were being introduced, including a systematic review of spending and appointment of a peer review panel of expert evaluators.[178] Regarding this evaluation, the Minster told us that:

    In this process of simplifying the schemes on the advisory side, we measured the value for money and the return in order to assess whether these schemes should close if they were not good value for money. We talked a lot about the optics of it for the customer, making the customer journey easier, but one of the advantages of contractually bringing them together is that, instead of having separate pots of cash from the Government for each of these different schemes, if one scheme is more beneficial to business, then the money can migrate directly to it and the pots become fungible, which is a better way to run this.[179]

68. Despite the Government's desire to create a simple and effective business support offer, the support landscape remains complex and difficult to navigate. This hinders its overall effectiveness. It also dilutes the Government's ability to track the efficacy and value for money of each new initiative and to measure their performance. If the Government had a better handle on what each scheme was aiming for, the results it should bring about and where the gaps in business need were, then it would be able to make its overall offer more effective. A more robust understanding of desired outcomes and value for money would support the development of this policy area. The Government should undertake a regular needs analysis to ensure its support offer is genuinely addressing areas of market failure and business need. We therefore recommend that the Government ask the NAO to audit the value for money of the schemes it offers at present.

LONG-TERM STABILITY IN BUSINESS SUPPORT

69. In addition to being complex, we heard that the support landscape can seem unstable, or subject to a constant process of "revolution" as Government priorities changed. As Dr Adam Marshall, Executive Director of Policy and External Affairs at the British Chambers of Commerce, told us:

    Businesses are bombarded with action plans, strategies, etc—not just individual sectors but really across the piece. […] When it comes to business support—when it comes to export support and manufacturing support—Government operates in a state of continuous revolution, and that is to the detriment of businesses, who become aware of something after two years, become interested in it after five and see it as part of the furniture after 10. Unless we have those kinds of timescales in mind, it becomes very hard for them to grasp or really deal with the support that is being pushed at them.[180]

70. The Government should seek to establish cross-party consensus to ensure that its offer of support for businesses reflects business need. This means that points of information about or access to the support available should remain consistent. The Government should strive to improve the schemes in place and make them flexible enough to meet business needs, rather than engage in continuous revolution of the system.


171   Q2 Back

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

173   Government Website, 'Finance and support for your business', accessed 4 February 2015 Back

174   Q9 Back

175   Q10 [Mr Cherry] Back

176   For example in Table 3 on page 29 we showed that UKTI has an output target for "70 per cent of businesses to report 'significant business benefit'" after engaging with UKTI and an outcome target to "achieve a specific amount of additional sales, and report on the actual number of increased jobs" Back

177   Q283 [Mr Marshall] Back

178   Department for Business, Innovation and Skills (GSB 22) para 12.1 Back

179   Q410 Back

180   Q269 Back


 
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Prepared 24 February 2015