Mark Prisk, Business Minister announced today that the new government would be shutting down the Business Link network. Real Business broke the news. Elsewhere, it was announced that the Regional Development Agencies, RDAs, would be axed.
Predictably, the RDAs and Business Links are up in arms. Lots of spokespeople have come out to insist they create value. Some business organisations, particularly in the north of England have joined in the shouting to keep the status quo.
The two reactions I have heard from the business community however, have been, ‘Great, about time too’, or, ‘What did they actually do?.’
We need to cut public sector spending. Usually the best thing a government to do to support business is to create a benign environment for entrepreneurs and then get the hell out of the way. Sadly, this seems to have been an approach that many an RDA has totally forgotten, seeing the creation of a regionally based support infrastructure as an end in itself. Goodbye to all that.
Do some of the grants distributed by the RDAs have a beneficial effect on some companies? Yes. Would they still have a beneficial effect if they were available and distributed nationally? Yes. Is it right that grants were distributed regionally which means that if there are two equally deserving companies in two different regions, only one would receive one? How about if one company was much better than the other but happened to be in a ‘hot’ region with more competition for grants? I don’t think so. How about you?
Frankly, there has been an absurd focus on supporting enterprise with government money in places that cannot absorb the investment. I know several Regional Venture funds that actively seek investments outside their own areas as they simply cannot find the deals to do for their funds in the way that they are structured. They find ways of investing in companies in other parts of the country and then set up an office in the region in question.The ECFs seem to be a much more imaginative, and potentially successful, mechanism to invest in scaleable businesses.
Reward successful entrepreneurs by looking at things like a favourable CGT and taper relief. Too much public money going into support entrepreneurship across the country is just misplaced. Spreading money wherever it is felt there isn’t enough about just creates a dependency culture. Entrepreneurship is about risk taking and winning. It is not necessarily compatible with a lets be fair for everyone ideal. We cannot create 9 Silicon Valley type environments across the UK, one in each region, just because each RDA want to be the next Silicon Glen, Fen, Corridor, Moor, Bog or whatever. For the best technology entrepreneurs in certain sectors, the best thing you can probably do is move to London, or go to Silicon Valley. No amount of money, public or private will change that.
The big question for me is what will replace these bodies and activities. I personally welcome the moves to streamline and rationalise an overly bureaucratic system. I will be more interested to see the detail of what is planned to replace. Bring it on.
I cannot imagine many people will be spending too much time worrying about the fate of Business Link and the RDAs at the BLN Growth Forum on 15th July. Those particular CEOs will be busy getting on with building great businesses in the real world. http://growthforum2010.thebln.com
The sooner Prescott’s folly – the RDAs – and all the associated baggage is consigned to the dustbin of history the better. To compete globally you have to be strong. Handouts do not build big successful businesses, they build big sticky empires for public servants.
RDAs and the way the money was distributed did seem to work at exactly opposite purposes to what makes areas like Silicon Valley so successful, clustering!
A few companies I’ve supported moved to other regions to get grants and immediately slowed down as they became out of the loop and all the lucky meetings that happen in a place like Cambridge stopped happening
The problem with RDA’s, as you mention, is that they are where government policy crashes headlong into economic reality. Money should be allocated to areas of highest growth according to economics but should be allocated to areas of lowest growth according to social policy.
I get concerned though when I read “x is being abolished” only to be followed by “and will be replaced by y” which sounds like little will, in effect, change.
However, balance is a good thing. Perhaps RDA’s for lower growth areas mixed with SBRI’s for R&D and tax incentives investment?
What does not work is spending £25 million running an RDA! Take a trip to our local RDA and you cannot be anything but impressed at the size and magnificence of their buildings and legions of staff…
So we abolish Business Links and replace them with… ecademy! WTF?!?!?
HAs Mark Prisk been Thomas Powered? If Mark Prisk has been smoking what Thomas has been smoking at ecademy we might as well shut the country down for the next ten years. What are we going to get? Black Star Ninja CEO networkers that all have to pay Thomas to be introduced to each other. Please tell me this is a joke? How about all VC investment being managed by panelists from Dragons Den and Alan Sugar getting to advise everyone on HR matters.
What you seem to have forgotten, or maybe you are mis-informed Mark, but private sector delivers all of the Business Link services….
It is no one organisation, so does not need to be axed, just change what you want to do to support the entrepreneurs and get the existing businesses to deliver the contract. It would work out a lot cheaper…
Just a thought of calm while everyone is getting over excited.
Thank you Mickey. Not sure if we have met but your names sees familiar somehow.
“The big question for me is what will replace these bodies and activities. I personally welcome the moves to streamline and rationalise an overly bureaucratic system. I will be more interested to see the detail of what is planned to replace. Bring it on.”
I agree with that, Mark.
Too much paper work and audit trails and not enough doing.
Let’s see if we have sensible people steering the ship 🙂
In the interest of accuracy can I clarify the figures for EEDA staff costs which are not £25million. For the record EEDA’s staff costs in 2009/2010 year were £13.6 million, and this figure includes salaries and pension.
Charlie,
Thank you Charlie although I have certainly not used this number in reference to RDAs. It may be that you refer to Ian Wilson’s comment but this number refers to overall running costs, not staff costs? It is not clear where these costs are in the EEDA website but you can see data for previous year: http://www.eeda.org.uk/files/Annual_report_and_accounts_2008_09.pdf
On the 2008-09 year, there was £14,467,00 down for ‘Salaries and wages’ (page 59) so assuming some savings, the staff costs you note above may well be the amount you have indicated. This does not represent the cost of administering EEDA however, it is the cost of EEDA’s staff. I am sure you can see from the accounts available why someone from the private sector would consider the costs to be in the £25 million ball park however.
So Mark Prisk broke this news without consultation with all his staff and co-workers at BIS, gave Real Business the exclusive, which he also has a Blog with for his PR stunt of “work experience”.
Real Business, who are claiming can do the job of replacing the Business Link web site….
Boy these connections just get better for the Ex “shadow minister for Cornwall”. Has he paid his expenses back yet?
Funny what you find when you start to dig…
If he really wants to find out about small business, why is he not seeing plumbers and shopkeepers, electricians, etc. the backbone of our economy.
I think we can take what Mr Prisk says with a big pinch of salt.
So Mark Prisk broke this news without consultation with all his staff and co-workers at BIS, gave Real Business the exclusive, which he also has a Blog with for his PR stunt of “work experience”.Real Business, who are claiming can do the job of replacing the Business Link web site….Boy these connections just get better for the Ex “shadow minister for Cornwall”. Has he paid his expenses back yet?Funny what you find when you start to dig…If he really wants to find out about small business, why is he not seeing plumbers and shopkeepers, electricians, etc. the backbone of our economy.I think we can take what Mr Prisk says with a big pinch of salt.
+1