This blog post was produced for inclusion in the Birmingham Economic Review for 2021.
The annual Birmingham Economic Review is produced by the University of Birmingham’s City-REDI and the Greater Birmingham Chambers of Commerce. It is an in-depth exploration of the economy of England’s second city and a high-quality resource for informing research, policy and investment decisions.
This post is featured in Chapter 2 of the Birmingham Economic Review for 2021, on Industry and Innovation: Pathways to Prosperity
Click here to read the Review.
This year we have continued to see changes in the provision of publicly funded business support both nationally and regionally. Most of this has been driven by the need to respond to the challenges faced by businesses because of the pandemic and the United Kingdom leaving the European Union. However, change has been a constant since I first started working in SME policy in 1997 in the then Department of Trade and Industry Business Link Directorate. This has always been the case in terms of more placed based approaches that have provided more specialised targeted support or sometimes referred as premium service because of the short-term project-based nature of funding. WM REDI under theme 2 has a project looking at business support in the region with a particular focus on the evolving role of universities in providing premium services. This project had already identified changes in provision that would have happened in the absence of the pandemic having identified several services funded by ERDF and other sources whose funding came to end. Historically locally designed placed based services have been funded on competitive basis including programmes such as Local Competitiveness Challenge in late 1990s and this has continued in the form of the more recent Community Renewal Fund. Evidence on the effectiveness of locally designed business support services is less well developed than nationally designed programmes as there has not always been the economies of scale and scope for designing sufficiently robust evaluations to capture learning and develop estimates of economic impacts.
Necessity has clearly been a driver of demand for public support for businesses including the provision of government backed loans. Demand for business support has increased since the start of the pandemic. Across the GBSLEP area there has been a 322% increase in the number of businesses supported by the Growth Hub. There has been a historically greater focus on provision of financial support through loans and grants to assist with cash flow whereas previously best value for public purse was considered to be achieved by targeted support for innovation and the provision of advice, information and training. Within the wider West Midlands region 124,011 Bounce Back Loan Scheme (BBLS) were offered with a value of £3,796,501,647 to businesses representing 8 per cent of lending on this facility. In addition, 8,413 Coronavirus Business Interruption Loan Scheme (CBILS) facilities were offered to the region’s businesses.
Business support over the past 18 months can characterised as the provision of national and locally designed ‘short-term grant-based schemes’ to support businesses through the pandemic. The success of the furlough scheme which was a novel intervention to the United Kingdom but has been piloted in continental Europe needs to be measured in terms of how it has allowed businesses to retain skilled staff and redeploy them once restrictions lifted and business conditions improved and not just prevented unemployment.
Helpfully BEIS has commissioned a study into the effectiveness of the grants schemes developed to assist businesses with the pandemic including Small Business Grant Fund (SBGF), Retail, Hospitality and Leisure Grant Fund (RHLGF), Discretionary Grant Fund , Local Restrictions Support Grant, Additional Restrictions Grant (ARG) Closed Businesses Lockdown Payment (CBPL) and Restart Grant scheme. Hopefully, we have similar evaluation of the SME Brexit Fund which was launched in February and closed in July to provide assistance with coping with regulatory burden for businesses that predominately trade with the European Union in the form of grant of up to £2,000 to help with training or professional advice.
The introduction of the above interventions represents a temporary shift in the focus of publicly funded business support from previous focus on start-ups, business with growth potential and delivery of wider objectives around socially inclusive growth and supporting transitions such as Brexit and greener economy. Therefore, the Recovery Taskforce and the Greater Birmingham and Solihull LEP should be given credit for the schemes they have designed and delivered locally. In particular, the Pivot and Prosper grant scheme which I was involved in evaluating. The scheme was elegant in design and timely in that it was launched in June 2020 just as businesses were emerging from the initial shocks of the pandemic and needed to focus on how they might pivot their business model and innovate to seize new opportunities. The scheme exhibited several features present in the OECD guidelines on good practices in designing business support programmes in response to the pandemic including:
To date Pivot a& Prosper has safeguarded 397 jobs and resulted in 108 new jobs which equate to retained £19.5m GVA. In the absence of being able unable to undertake rigorous econometric modelling due to the absence of meaningful comparison group our estimates for cost per job are £3,552 and BCR of 10.9.
In July the Government published UK Innovation Strategy: Leading the future by creating it which has shifted focus the back to potentially high growth business in emerging business sectors. Amongst the announcements in the strategy were the introduction of the Help to Grow: Management and Help to Grow: Digital programmes and funding to extend Made Smarter Adoption pilot to the West Midlands and North East.
Finally, to better place businesses in the region in recovering from recent shocks, the three Local Enterprise Partnerships, the WMCA along their main partners commissioned a review of business support in the region. The review was undertaken by Metrodynamics and sets out how a more joined-up business support ecosystem might be created within the region by following four principles, or pillars.
The key difference between the review findings and the Government Action Plan for Small Business published when I was working for UK Small Business Service in 2004 is the greater focus on the business support ecosystem. In the intervening years the Greater Birmingham region has developed a very sophisticated Professional and Business Financial Service sector (BEIS 2020) that can be drawn upon in delivering programmes to support inclusive growth in the region.
 British Business Bank, 2021, Coronavirus loan schemes continue to support businesses evenly across the UK, new analysis shows
 Bramley, Pugh & Schwartz, 2021, Evaluation of the Pivot & Prosper Grant Fund Programme
 Metrodynamics, 2021, West Midlands – Future Business Support. Final Report. July 2021