We need common sense… not political grand gestures

By The Editor
Jun 14, 2010

Nick Sturge: Will the government do the right things to support existing, and encourage new, businesses?

By Nick Sturge

Does the new government know what is best to stimulate economic growth?

Vince Cable, has labelled his Department for Business, Innovation & Skills as the “Department for Growth”, but will they do the right things to support existing, and encourage new, businesses?

They have announced some good ideas like making small business rate relief automatic (currently your local authority will bill you the full rate unless you specifically claim the relief), simplifying business taxes and making it easy to create a business. While these should help businesses, they are hardly rocket science and amount to little more than a bit of Business Process Re-engineering (“BPR”).

But there are also some mixed messages, especially around the Regional Development Agencies and Business Link.

They have suggested that RDAs should be replaced with Local Enterprise Partnerships, although where the RDA is popular, the LEP should be ‘on the same lines’ as the incumbent RDA. Research by the IoD, on its members across the country, suggests that the RDAs are popular (subject to a bit of BPR here and there of course), so, if Cameron’s ‘Big Society’ includes listening to business, will we have RDAs simply by a different name?

In the South West, the RDA has proved itself to be popular with business and has quote heroically managed to deliver economic growth across a vastly disparate region. It could easily do with being split in two as I think it is too big.

The RDA delivers some key support for business — such as the Business Link contracts and the Grant for R&D Scheme. The latter has been the life-blood of many hi-tech businesses and if that gets lost in the shake-up — or even stalled for a while —that would be disastrous.

The Government have made clear that the UK’s economic growth will be delivered by high-growth businesses, especially hi-tech ones.

Some in the government have also said that Business Link is a waste of money and should be replaced with a website, yet Mark Prisk, the new Minister in BIS, (“focusing on key business sectors, promoting enterprise and cutting red tape”) has said that businesses need more “face to face” time. You can’t deliver face to face time with a website, pal!

99.7% of UK private businesses have less than 250 employees — these are the types of business that support from Business Link should be able to help, and in my experience, you need to get out and meet companies face to face and demonstrate the value that you can add to a business before being “let in” — be it a brand-new start-up, a struggling business or a sustainable, trading business that can be assisted in maintaining its position or improving profits.

The Government is right that we need to provide additional support to high-growth businesses —  but my concern is that they don’t see the excellent work that is being done in this area, not least by the 300 or so business incubators around the country. Many of these are members of UKBI, the national trade body established by the Treasury 12 years ago to promote best practice in nurturing, supporting and enabling business growth across all sectors. SETsquared, the specialist in accelerating high-tech, high-growth businesses relies on government subsidy, and rightly so, but the fear is that the value these hot-houses provide will be thrown out with the bath-water in the imminent shake-up.

NESTA, the National Endowment for Science, Technology and the Arts – an independent body with a mission to make the UK more innovative — states in its latest report that Business Link does not target the ‘disproportionately innovative” high-growth businesses, but that does not mean that it should be scrapped.

Hopefully, Vince Cable and his merry men and (woefully, just the one) woman will build on what we have, simplifying any complexity and strengthening the really good bits, rather than start from scratch. We need common sense not political grand gestures.