Opinion

Who killed the UK's Business Growth Service?

11 min read

02 December 2015

The pig-iron chancellor has effectively told 3,000 business advisors: "Get your coat – you're fired" after his decision to wind down the Business Growth Service.

In a stunning decision, that sends the clearest signal yet, the government has shown that not only does it not understand anything beyond corporate big businesses, but neither does it understand the future of the UK economy – and where future jobs are coming from.

It’s been known for some time that the corporate sector is a net destroyer, not creator, of jobs – AI, robots, outsourcing and automation will ensure that that trend will continue for the foreseeable future.

So as corporate jobs decline, where do the government think that future jobs will come from? Shouldn’t it be finding ways to support and invest in the SME sector, rather than pulling the rug from under those who have built their plans around the GrowthAccelerator scheme which helped to make help and skills access and training more affordable for those who need them most?

How could the newly appointed minister for small business, Anna Souby, stand idly by and just let this happen, saying: “The most important way we can help small businesses is to continue to secure a strong, growing economy.” When she took on the job unexpectedly after the May election, she admitted on her local radio station how surprised she was and how little she knew about it. 

It’s long been clear that her boss Sajid Javid, who is a corporate animal through and through and a merchant banker by trade, is George Osborne’s man at BIS – but parroting her boss’s boss in a way that begins to sound inane rather than just glib raises the suspicion that she was put into the job to do exactly that.

Whether he succeeds in succeeding his friend David Cameron as prime minister in due course or not, and I suspect that Osborne will, before too long he will rue this days work – especially and the manner in which it’s been done. It’s a decision as bad as the one he tried and failed to push through, under precisely the same guise, on tax credits, from which the cracks began to show in this brittle “iron chancellor” – as he was once dubbed.

Because, from a democratic viewpoint, this was worse. No debate. Not even an announcement. Snuck out in the small print at the back of the budget report. The abrupt removal, overnight, of the main plank of the governments offering, such as it was, to the startup and small business sector. Not to mention those who provided the skills and skills training, changing their landscape overnight. No warning, no transition, no grace period. 

As Gavin Percy, business development strategist at Winning Edges, has pointed out it’s more than likely merely a paper gain for the Treasury as the programme was more than likely largely self-funding. “Also the lack of notice is laughable,” he added.

Meanwhile the idea that big business is interested in, or equipped to, fund such real businesses is just as laughable – a suggestion from Emma Jones, founder of Enterprise Nation, who is know to be increasingly close to government. She said: “The closing of the GrowthAccelerator scheme shows that the government clearly expects the private sector to take over its small business support function. We’d like to see funding for such schemes come directly from big business.” 

Enterprise Nation is, of course, largely funded by big business sponsorships, so seems well placed to benefit. But the idea that corporates understand or would support other business seems frankly bonkers given the way in which organisations ranging from Tesco to the banks each treat suppliers and the “competition”.

But none of this is really the point. Percy also said: “I personally have three companies who wanted to take up GrowthAccelerator in early 2016 and I was planning for the work to take place at that time. I now have a much smaller pipeline of new business to work with and I am sure that I will not be alone.” That’s a certainty. As is that it’s a “great shame and, in my view a poor decision”.

Pulling the rug from more than 3,000 skills advisors, with no notice. Changing the SME landscape, for the worse, for no real gain or saving when we are going to need more jobs and more small businesses. I’d call say calling that a “very poor decision” a very British understatement.

It’s not just a bad decision though, it’s a bad sign and a bad signal – that neither this pig-iron* chancellor nor Cameron’s government, which have flown the flag with the slogan “Business is Great” understand, or care about, SMEs, startups and small businesses. There has been no consultation, no continuity, no discussion. So, firing from the hip, how can this chancellor or his government ever be trusted again?

*Pig iron has a very high carboncontent, typically 3.5–4.5 per cent, along with silica and other constituents of dross, which makes it very brittle and not useful directly as a material except for limited applications.

Do you agree with what Barry James has to say? Will you be hit by the withdrawal of the Business Growth Service? Let us know by getting in contact at editors@realbusiness.co.uk

Update – Emma Jones, founder of Enterprise Nation, reached out to Real Business in response to Barry James to say the following:

Thanks Real Business for the right to reply. Our view has been slightly misinterpreted in this post and I’d like to put it straight.

At Enterprise Nation we’ve been delivering business support to small businesses for over a decade and, as one of the founders of national enterprise campaign, StartUp Britain, which I ran for three years, these experiences have given me an insight into how government best encourages and supports enterprise.

In my view, the role of government is to create the conditions to enable small businesses to thrive. This means ensuring decent tax rates, super fast broadband, good transport links and confidence in the economy so businesses can go about doing their business.

It is not the role of government to deliver day-to-day business support to small businesses – for this, the private sector should prevail.

The private sector has benefited from schemes such as Growth Vouchers (with which we were heavily involved and saw advisers double the size of their business based on securing new Growth Voucher clients) and Growth Accelerator, but the advisers who have benefited from these schemes are entrepreneurs in their own right and will now be going direct to potential customers and making the case as to why small businesses should pay for professional advice and support, without subsidy from the government. If the advice is good enough, small businesses will pay their way.

As government support recedes, large corporates do indeed have a role to play. Look at the Digital Hub being run by O2, the Digital Garages operated by Google, Unilever Foundry, WAYRA Accelerator, online content and advice provided by corporates from Microsoft to Xero, and what this adds up to is free advice, support and acceleration for small businesses.

The small business owner accepts that ultimately these companies would like to sell their products and services but is happy to accept advice in exchange for a sales message. That’s business!

Alongside large corporates, small businesses have a role to play in supporting each other. We provide a platform for this peer support every day, where successful entrepreneurs share their secrets to success, experts offer guidance on their subject of choice and businesses at the same stage share stories plus tips and techniques.

Business support is best delivered by a partnership of large corporates, small business, and, where required, a facilitating role from government.

It’s this partnership that we pursue and it’s one that’s enabled us to deliver business support to thousands of business owners.

The new business support scene represents a bright future for every small business owner that wants to make the most of the support and advice on offer. There’s plenty of it!