Decisions are coming for those who have run externally funded business support programmes.
This year, the UK will spend £900m on the UK Shared Prosperity Fund (UKSPF) and in the previous financial year it awarded £1.5m under the same fund. This funding will cease from March 2026 as one of the casualties of public spending tightening.
The UKSPF allocations had originally been trumpeted as the replacement for the European Strategic Investment Funding with promises that there would be no reduction in regional economic development allocations but in the event UKSPF did not event stretch to one full budget cycle of the European Union.
The issue is that it was this funding that mostly paid for business support programmes in the UK and now economic development bodies are considering whether this activity is worth funding from different hard to come by sources.
What is Business Support?
In headline terms, business support is the advice and guidance given to companies to assist in their development. A vanilla signposting programme is provided by Growth Hubs and this will continue under a new largely e-enabled national Business Growth Service. The additional programmes have tended to focus on supporting areas such as skills development, stimulating innovation, product development and supply chain activities. The services in any one area have varied according to perceived need and availability of suppliers.
The question which is being faced by many is, with a new national Business Growth Service in place, why is there a need for enhanced local provision and will this add value?
Looking through the telescope the wrong way
Faced with budget constraints, it is perfectly fair to ask whether different public bodies should be allocating funds in an attempt to enrich the shareholders of private enterprise with a hope that it might lead to further local employment. Faced with such a conundrum, it is unlikely that too many agencies would fund a service.
Considering a business support function from this perspective, is the wrong place to start. Effective economic development can use a business support programme as the conduit to address the objectives of an economic strategy. Where business support is relationship based rather than programme led, there is the potential to link businesses into those initiatives identified to support the local economy whilst at the same time adding value to the business. At the same time the business can be better embedded in all the activities of the local economy.
This is true both at a national level where government cannot deliver the various aspects of its Industrial Strategy without engaging with business and locally. Effective delivery of items such as supply chain reshoring, product development for defence, increasing low carbon engineering and increasing exports requires engagement with business. Strengthening the UK’s position in the frontier industries of the 8 sectors highlighted in the Industrial Strategy requires the same.
Locally, businesses may engage in detail in helping identify future land and property requirements, work collaboratively in helping people into work or set out future skills development requirements. Where businesses are brought together new product opportunities may emerge or research opportunities identified for local universities.
How does business support benefit economic development?
With a relationship led approach to business support with those businesses large or influential enough to help shape a local economy, becomes an integral part of economic development.
Businesses can provide intelligence on their own potential future plans, provide insights into their sector, highlight sector opportunities for the future, engage with local economic development initiatives and even act as ambassadors for the local region. This is not about social value, although it could be, it is about businesses finding value through engaging in those initiatives that support the local area.
When business development is considered from this perspective, business support is not an optional add-on to an economic development service, it becomes the basis from which all economic development work is considered.