Private sector to the rescue?

Private sector to the rescue?

With all the rhetoric from National Government in recent years about the need to support small businesses it seemed, strangely, that there was actually more effort going into supporting larger businesses or those that were already growing.

Now, with the closure of the Business Growth Service at the end of March 2016, it seems that not even ‘growth’ remains on the Government’s ‘to be supported list.’

Start ups remain on the agenda, but quality subsidised business support is patchy and in some areas almost non-existent.  The national start up loan programme has retained funding, but there is increasing evidence of a more selective approach being taken to the help on offer.  If you look behind the headlines at the rationale for these changes, you will find a message frequently repeated: ‘The private sector will fill the gaps.’  But is that really likely to happen?

All the evidence of the last 10 years indicates that banks have no appetite for lending small amounts to start up and early stage businesses.  And there is little evidence to suggest that the variety of new entrants to the market are interested in providing financial support to businesses unless they are at least 24 months old, have a clean credit history and some good initial results.  When it comes to business support, there are a few good examples of CSR-driven support programmes offered by the professional services sector and high quality incubators, but such initiatives are very unlikely to transform into a comprehensive service, particularly for the very small end of the market.

Businesses interested in finding out what support is available to them will have their work cut out.  There are 39 separate Growth Hubs located across the country, each resourced by a Local Enterprise Partnership (LEP) and each with a different idea about how to operate.  The Greater Birmingham and Solihull LEP appears to have not yet decided whether it can signpost businesses to the private sector for business support.  If not, where does that leave the Government’s strategy?