The future of UK business support funding: Is it time to take a fresh approach?
The nation’s access to nationally funded and regionally delivered business support is fragmenting.
Next month, central government is stepping away from directly funding regional business support strategies as part of a longer-term plan for devolution. This is undoubtedly going to see the disappearance of some Local Enterprise Partnerships (LEPs) who have been given the option to either stay within upper-tier local authority fiscal control, become truly financially independent autonomous bodies, or close.
At the same time, uncertainty hangs over the UK Shared Prosperity Fund (UKSPF) which finances, among other things, local regeneration – and with that early-stage local businesses and start-ups.
UKSPF was the post-Brexit replacement for the regional injection of European cash which was delivered via the European Structural and Investment Fund Programme (ESIF) – and is now itself scheduled to end in March 2025 with no replacement so far identified.
It was part of the levelling up agenda – and as a result, regions were delivered cash pots in differing quantities based on need, with local decisions taken on how funds should be spent.
Of course, the UK’s SME community is very used to seeing Government-funded support chop and change. Think good old Business Link, launched in 1992 – the brainchild of Michael Hesseltine. It established a national ‘dads army’ of experienced professional advisers who were deployed to knock reason into fledgling founders up and down the country. The plug was finally pulled in 2012, sanctioned by Nick Clegg.
Business Link was replaced by 12 Regional Development Agencies in England, which were then superseded by 38 Growth Hubs.
The quiet disappearance of the UKSPF from the regional funding landscape is concerning. I’m not arguing for it to remain forever, but what I am saying is that this could be an opportunity to come up with some innovative and creative solutions rather than see it unwittingly slip into oblivion.
To coin a well-known 80s song by Simply Red that was linked to a historic inflationary economic backdrop, we know Money’s Too Tight (to Mention). So perhaps this is an opportunity to relieve the burden on the taxpayer while delivering the same – if not better – level of support to small firms.
With news of council bankruptcy increasing apace, carving a future funding model that does not need to weigh on Government cash is clearly going to be vital.
There are options, and in my view, this could be the time to consider developing a regionally delivered public-private funding partnership, at a national scale.
This could see start-ups and early-stage businesses access a free, online, and basic level of support and then founders contributing financially to costs for more intense programmes for which they are eligible, and from which they are evidentially proven to benefit.
This then creates a clear role for the private sector to invest in and roll out pioneering support solutions.
Improving the accuracy and ease of access to time-poor start-up founders is another vital step. The UK is already a leader in financial software and a pioneer in open banking. This could play a key role in triggering a support journey where small businesses are served the right support at the right time – for example when banking transactions show the company has introduced payroll, the business will be served information on how to manage and motivate staff.
Delivering a free and national ‘basic’ level of support provision, followed by more targeted support based on business requirements would not only end the ‘postcode lottery’ that exists, where businesses in different regions have different levels of access to support. It would also deliver a single source of truth when it comes to what works in business support, i.e. the type of support that has the greatest impact. This, in turn, would deliver on productivity in the public sector, of which the chancellor spoke in the Budget, as public money would only be deployed to programmes that show evidence of having delivered results.
It’s a golden opportunity to do something good. Let’s have the debate and not resort to the old short-term crowd-pleasers that tick the box but solve nothing. Getting this right will deliver improved individual performance for companies, as well as a better return on investment on taxpayer spend.
Emma Jones is the founder and chief executive of Enterprise Nation
