Mark Hart discusses changes to business support in England and its impact on businesses. This blog post was produced for inclusion in the Birmingham Economic Review for 2022. The annual Birmingham Economic Review is produced by the University of Birmingham’s City-REDI and the Greater Birmingham Chambers of Commerce. It is an in-depth exploration of the economy of England’s second city and a high-quality resource for informing research, policy and investment decisions. This post is featured in Chapter 2 of the Birmingham Economic Review for 2022, on business and disrupted markets. Read the Birmingham Economic Review. Visit the WMREDI Data Lab to find out more about Birmingham.
With the creation of a government department, on the back of the ‘levelling up’ election slogan, there has been the inevitable consequence for the delivery of local business support. In short, following the publication of the Levelling Up White Paper at the start of 2022 the Department for Levelling Up, Housing and Communities, in collaboration with the Department for Business, Energy & Industrial Strategy, set out a framework for integrating Local Enterprise Partnerships into local democratic institutions. With the existence of the West Midlands Combined Authority (WMCA), this means seeking to develop even closer relationships for the Local Enterprise Partnerships (LEPs) in the West Midlands.
The West Midlands
What will this mean in practice for the West Midlands? Well, as might be expected, there will be a great deal of uncertainty while this integration process takes place as the important functions that LEPs have been responsible for in the last decade are integrated into the WMCA. These include, for example, Growth Hubs, International Trade and Local Digital Skills Partnerships and this uncertainty has led to challenges around funding and the continuation of ‘business as usual’ for the local economy. Budget allocations for 2022-23 have been pared back to an absolute minimum and this is hardly an environment for holding on to key delivery staff.
With the UK Shared Prosperity Fund (UKSPF) now officially announced in April 2022, with investment plans submitted by early August 2022 for a three-year funding period until March 2025, the WMCA has been awarded £88m with a clear emphasis on local business support as one of three key priorities. In anticipation of this funding package the WMCA had already instigated a review of business support in 2021 to try and get some strategic overview of the hundreds of individual initiatives and programmes currently running or winding down in the region, many of which are funded by the EU. The emphasis in that review, which involved all the LEPs in the region, was to develop a sense of what the priorities should be in terms of a group of intensive premium business support products to address the two themes of Small and Medium Enterprises (SMEs) Competitiveness and Productivity and Research and Innovation. These premium products would sit alongside a range of more self-service mostly online generic ‘Core’ business support offerings for all businesses across the West Midlands region. So, with the framework outlined and the funding in place with the WMCA for business support, it remains to be seen how the engagement with the private sector will develop given that it has been somewhat of a challenge in the last 12 years for a variety of reasons.
However, these ‘regional’ premium programmes must recognise the role of national schemes like Help to Grow: Management (H2GM) and Help to Grow: Digital, launched in 2021 and 2022 respectively, and then it remains to be seen how best UKSPF can operate as truly net additional business support funds. With local business schools delivering H2GM for BEIS and HMT, it is important to ensure that these national schemes designed to deliver intensive support to thousands of SMEs in the West Midlands are integrated into any business support ecosystem developed locally.
If we are being optimistic, it will be well into 2023 before the LEP integration takes place and some sort of common strategy for the LEPs is driven by the WMCA and its Mayor. Meanwhile, the UKSPF investment plans gather momentum so this integration could not come at a worse time for the private sector and in particular SMEs across the region as they are confronted with a combination of the cost of doing business crisis, supply chain disruption, labour and skill shortages, the downturn in international trade because of the Brexit deal, rampant inflation and a recession forecast for the end of 2022 and to last well into 2023. These businesses will need cash to survive these next 12 months and central government will once again be obliged to intervene as they did in March 2020 in response to the COVID-19 pandemic to deal with this national economic crisis.
In addition, in the wake of COP26, business was being urged to transition to green business models but many view these investments are seen as costly and not sitting well with their traditional business model and contradictory to business performance. Many are sympathetic but unaware of the resources and tools to make it happen.
The last thing an SME business owner needs to be confronted with as they seek support to survive and grow is another round of re-arranging the policy deckchairs in the context of a stagnating economy. As in Scotland and Northern Ireland, and to a lesser extent in Wales, over many decades, we need a highly visible and effective public policy framework of business support that is respected by the private sector. I am not sure we have ever had that in England and therein lies the problem as most SMEs are unaware of what business support organisations exist and the support that they offer. I am pessimistic that this will change anytime soon.
This blog was written by Professor Mark Hart, Deputy Director, Enterprise Research Centre at Aston Business School.
The opinions presented here belong to the author rather than the University of Birmingham.
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