Anger at culling of Business Growth Service “only just finding its feet”
7 min read
02 December 2015
While the chancellor failed to mention the winding down of the Business Growth Service and its initiatives such as Growth Accelerator in his speech or subsequent full Autumn Statement and Spending Review documentation, it has now emerged that it will go as part of wider cuts to the Department for Business, Innovation & Skills (BIS).
Having been around for under two years, and despite having helped nearly 30,000 business grow, George Osborne took the decision to cut its budget and place a greater emphasis on local authorities and the private sector to provide these kind of services.
Including programmes such as the Growth Accelerator and Manufacturing Advisory Service, the Business Growth Service was designed to provide assistance to companies with fewer than 250 employees and a turnover of £40m.
Alan Clark, founder of Trademind, had used the service on more than one occasion and found it very useful. “As a business owner, we are always aware of our own gaps in our skills set and are always looking for ways to earn the skills required,” he explained.
“The Business Growth Service offered this solution and enabled our business to grow based on the skills I learnt directly from the sessions I attended. All sessions were free and as an SME, this was important as cash flow and capital need to be ploughed into developing our business.”
Clark went on to tell us that he was “deeply saddened” that the service is being removed, especially as before the general election in May SMEs were called the key to the country’s recovery. “I feel this is removing some of the help needed for small businesses to grow,” he added.
One of the biggest impacts to come out of the chancellor’s decision will be the disappearance of work for the business coaches and mentors that had signed up to be part of the service.
Rafael Dos Santos and his management team at mi-HUB are all business coaches approved by the the Growth Accelerator, charged with providing strategic planning to help small businesses grow.
He commented: “I think it’s a real shame that such service has closed down because the reality is that a small business that receives coaching via the Growth Accelerator is much more likely to succeed and generate a new job than a business owner that doesn’t.
“The service partly pays business coaches with a lot of experience to help entrepreneurs to grow their businesses. If you put that down into numbers, the government receives £600 in fees plus £700 in VAT from the business owner that is receiving the consultancy from the business coach. The government pays £2,4000 (for companies between 1-4 employees) to the business coach.”
Read about our coverage of the Autumn Statement and Spending Review 2015:
- A 500-word summary for entrepreneurs and SME business owners
- Rolls-Royce CEO among those concerned about R&D loans
- Tax abusers face being hit with 60 per cent penalty fee
So why is the government shuttering a service that is essentially part self-funding? Dos Santos doesn’t understand, and thinks the government would easily get its investment back in taxes paid by the employer and the employee.
“It’s not just about helping someone grow their business, it’s about creating jobs and paying more tax,” he urged.
However, Growthstreet CEO James Sherwin-Smith believes it has something to do with the Heseltine report, published in 2013. “No stone unturned: in pursuit of growth”, penned by Lord Heseltine to provide a “comprehensive economic plan to improve the UK’s ability to create wealth”, suggested passing the baton for SME development from central government to business-led Local Enterprise Partnerships (LEPs).
Sherwin-Smith said: “This is a huge vote of confidence in LEPs and should enable faster growth at a grass roots level by promoting innovative and collaborative approaches within the context of local communities.
“BIS now needs to re-focus on national agenda items that are critical to business growth: tackling the SME overdraft crisis, promoting alternative finance options and ensuring all commercial credit products are priced fairly and transparently.”
But will it be able to do this now that the department has been saddled with budget cuts of 17 per cent. In the full Spending Review documentation, it was said that “in order to prioritise spending on economic growth”, BIS will “reduce departmental administration spending” by a further £100m by 2019-20. This will, details went on to explain, contribute to a wider programme of reform, including further reducing the number of Arm’s Length Bodies (ALBs), unlocking efficiencies through increased digitisation and increasing the pace of estates and workforce reform.
From a total budget of £16.6bn in 2015-16, BIS will only have £13.2bn to work with when 2019-20 comes round. It begs the question, what went wrong with the Business Growth Service that its relatively small budget could not be protected?
Grant Thornton, which delivers the service for the government, got in contact with Real Business to issue a statement. It said that the decision to cull it “does not in any way reflect concerns about the performance, quality and value of the service”.
In fact, it said that nine in ten recipients of support said they would recommend the Business Growth Service. “We are proud of the value the service has added to the thousands of businesses it has supported on their growth journeys,” the firm added.
Another Growth Accelerator accredited coach, Alison Edgar, believes that it is a “huge loss”. Edgar, who is MD at Sales Coaching Solutions, explained it will be missed by both small businesses seeking essential advice and coaching though the funding, and those that were coaches and growth managers of the scheme.
“These cuts will make a real impact on everyone involved in the Business Growth Service and it is such a shame that it has come to an end so suddenly, especially when I feel it was only just finding its feet.”