Simplifying Business Support for SMEs
In this thought-provoking article, Patrick Robertson, Principle Consultant at Steer Economic Development delves into the complex world of business support and sheds light on the crucial role of Growth Hubs in simplifying and coordinating assistance for small and medium-sized enterprises (SMEs).
Before joining Steer Economic Development (Steer ED) in May I spent eight years in the Leeds City Region Local Enterprise Partnership and West Yorkshire Combined Authority managing business support provision including the West Yorkshire Growth Hub.
The UK Government setup Growth Hubs in 2015 to simplify and coordinate business support locally. With a relatively small budget from central government, Growth Hubs were tasked with coordinating, simplifying and communicating the local business support offer to SMEs.
Growth Hubs have underpinned most of the business support provision in the last eight years and played a hugely undervalued role in the economic response to COVID-19 and the UK’s exit from the EU.
My work in West Yorkshire culminated in securing the long-term future of the local Growth Hub in the region. I’ll explore some of the reasons the national future and funding of Growth Hubs is uncertain, why their purpose is more relevant than ever, what local areas can do, and some of the challenges they may face.
Since Growth Hubs were established there have been unprecedented economic shocks and changes to international markets, as well as shifts in central government’s approach to local economic development. There has been localism, often in parallel to centralism, with occasional co-design. It has not been clear at what level government believes business support is best delivered. Growth Hubs, and what they were set up to achieve, have become a victim of this vacuum, left to coordinate a landscape which has lacked a clear national direction.
Growth Hubs, due to their relative low cost, changes in government policy, and the challenges of measuring their effectiveness, have not had a high profile within government for many years. There is a lack of understanding of what Growth Hubs do, and new initiatives were frequently launched without the knowledge or involvement of those delivering business support in local areas.
‘Simplification’ was the key motto when Growth Hubs were setup and that is more relevant today than ever. My old colleague put this into context – it’s not in local government’s gift to make the national business support landscape simpler, but it can simplify how that offer is communicated to local businesses. This is what Growth Hubs do.
Since 2015, the business support landscape has become more fragmented and the role to simplify this for businesses has become even more important. In West Yorkshire much of the Growth Hub’s success stemmed from an independent approach that put businesses at the centre, helping them to access the right support, at the right time. The landscape is confusing, so the Growth Hub’s role was to remove the burden of understanding this from the SME.
The way that business support is funded is changing with the end of European Funds, greater devolution of powers, and the introduction of the UK Shared Prosperity Fund (UKSPF). Nationally, Growth Hubs have continued to be centrally funded but at reduced levels and with short term year-by-year allocations.
There remains a strong case for central funding of Growth Hubs. Central funding creates the opportunity for a degree of consistency, added value, and the opportunity for the co-design of national programmes in a way that works locally. However, local areas can’t simply wait for certainty to come from central government and need to consider alternative funding routes for business support.
When I was responsible for the West Yorkshire Growth Hub, I proposed a new business support model in West Yorkshire and built a successful business case that secured the long-term future of the service. This wasn’t revolutionary. It was in many ways a reversion to the simplification motto of the early Growth Hub days. The new model prioritised how the offer was communicated to businesses and took a more proactive role in supporting other providers to develop services that are really needed and deliver them in a way that is coordinated and complementary.
Crucially, we had strong evidence from local impact evaluations about the difference the support was making. With assurance of future funding, we could focus on how we could raise the profile of the service and make sure it was accessible to all communities across West Yorkshire.
It’s impossible to underestimate the value of continuity and certainty within business support provision. Many SMEs don’t engage with public sector business support because of its sheer complexity and the sense that once you’ve spent the time trying to understand it, the rules or criteria change as programmes stop and start. The West Yorkshire business case was about providing a clear, constant, and long-term access point so that, even though the actual business support offer may keep changing, SMEs still know exactly where they need to access support.
The nature of UKSPF, and how it is structured and delivered in different administrative areas, will inevitably lead to greater fragmentation and an increasing postcode lottery of support. This increases the importance of Growth Hubs (or something that performs that role) in order to ensure this hotch-potch of provision makes some sense locally.
This brings me onto one final point; the welcome continued rollout of Mayoral Combined Authorities (MCA) and the greater local funding and decision making risks being a double-edged sword. Whilst in West Yorkshire, the Growth Hub is in a better position than ever, I am very aware through my former colleagues in the national Growth Hub network, this is not the case everywhere.
Places without access to the opportunities provided by an MCA currently risk being left behind. This is being played out in other policy areas, including the generally well received Investment Zones policy. Its welcome that government abandoned the Truss policy of competitive bids for Investment Zone status, but its focus solely on MCA areas risks those areas, typically rural areas, falling further behind.
Challenges remain, but the need for local areas to help SMEs to access the support they need, has never been greater.
In my new role at Steer ED, I’m excited to be able to work with other LEPs, Combined Authorities and Growth Hubs to help local areas create a strong and coherent local business support offer and local economic strategies. Steer ED brings evaluation and analytical specialisms that support local areas to create a strong evidence base and compelling business cases to support investment in local business support. How local areas do this, and how they adapt to the new funding landscape, forging a clear identity and a policy direction from central government, will be key in how business support for SMEs looks over the coming years.
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