08Recent policy initiatives and what they mean for the business support system

A number of recent policy developments may have a significant effect on the way business support infrastructure is shaped: A number of recent policy developments may have a significant effect on the way business support infrastructure is shaped:

  1. The Heseltine Review. Lord Heseltine’s ‘No Stone Unturned’ report covers a number of issues relevant to this paper. It argues for expansion of state support for research and development within the public sector, for better coordination within government and between various government and non-government bodies and the LEPs, for improved procurement practices.  Most importantly, Lord Heseltine identifies a need for an institution to sit at the core of the business support system. He suggests that the Chambers of Commerce are the best fit for the job, as they have the visibility and local engagement that will allow them to promote services and channel the needs of the business to the Government. One of the policy options suggested by Lord Heseltine was to make membership of their local Chamber compulsory for business, but it was rejected by the Government. Yet the challenge of identifying the institution that will coordinate the business support infrastructure still needs to be addressed.
  2. The Business Bank. Some interviewees suggested that the Business Bank may play the role of business support coordinator. While it seems perfectly reasonable for the Bank to become a body responsible for the delivery of all business finance initiatives, it is not clear whether it will have capacity to engage with businesses locally and whether it will possess expertise in areas beyond finance and funding.
  3. City Deals. Wave 1 City Deals were agreed in Summer 2012, and have included devolution of significant powers related to business support provision: access to finance, investment attraction or promotion of growth in strategic sectors. The Bristol and Greater Manchester City Deals include a commitment to establish Business Growth Hubs, which will become the local coordinators for business support and key access point for businesses. Essentially, this represents a shift towards a more decentralised and location-based business support infrastructure. It has recently been confirmed that 20 cities will enter a second wave of City Deals and it is likely that a number of cities will wish to negotiate arrangements similar to the Business Hubs in Bristol and Manchester.

These developments also relate closely to questions about the role of the LEPs in providing business support. A number of interviewees suggested that, over time, LEPs should become local coordinators of business support. The LEP system is still developing, and the ability of LEPs to address the problems of businesses is still to be proven. Until the capacity and longevity of LEPs becomes clearer, it would be a risk to hand a coordination role to them as a group. Instead, there should be flexibility for local LEPs which have the desire and capacity to do so to take on this role.

All of the developments discussed have potential to improve the business support infrastructure, but is not clear how they would relate to one another and to what extent they could be coordinated. Establishing conflicting structures could be even more damaging than leaving everything as it is.

The Government’s response to the Heseltine Review has confirmed that business support needs to be better co-ordinated, but they have made no clear suggestions for how to achieve this. The 2013 Budget expanded some existing initiatives and introduce several new ones, but did not address the complexity of the system.