Nicky Stevenson
Having been a business support professional since the mid 1980s, it is interesting to reflect on the similarities and differences between the approaches of the Conservative governments of 1979 – 1997 and the Conservative-led Coalition government elected in 2010. After a year of activity by the new government we can begin to identify some trends and draw some comparisons.
The catalyst for change in the 1980s was rioting in the streets of Liverpool, London and Bristol in 1981. This was caused by a number of factors but one was certainly high levels of unemployment. The result was that the government took a number of steps to address these problems. Even at a time of massive public sector spending cuts, it was recognised that steps must be taken to address the palpable problems particularly of the inner cities:
• To regenerate deprived areas by creating business growth and employment opportunities
• To enable unemployed people to start their own small businesses, creating their own jobs
In order to achieve these aims, government created a series of regeneration initiatives such as Enterprise Zones, the City Challenge programme and Single Regeneration Budgets (SRB). In order to support new business development they established local Training and Enterprise Councils (TECs – later to morph into Learning and Skills Councils and Business Links), the Enterprise Allowance Scheme (EAS) and a local business support infrastructure in the form of Local Enterprise Agencies (LEAs). They also funded a national Co-operative Development Agency (which spawned a network of local CDAs) and other agencies to support employee buyouts and employee ownership. These actions demonstrate that the government saw its role as managing the consequences of unemployment and deprivation and funding the solutions.
Some of these approaches have changed over the intervening 25 years but many of them have been adapted, incorporated by the Labour governments of 1997 – 2010, yet are now being abolished by the Coalition government as part of its deficit reduction policy. So were these approaches any good? And what can we learn from them in the current environment, where there are many equivalent and similar problems?
Regeneration programmes
The assumption behind the earliest regeneration programmes such as the Enterprise Zones and City Challenge, was that regeneration could be provided by a trickle down effect. By encouraging inward investment, developing the built environment and creating high level jobs in a deprived area, the wealth would ultimately trickled down to unemployed local people. The most high profile example was the London Docklands development in which £3,900 million was invested by government. The criticisms were that there was no evidence that trickle down worked, that jobs were merely displaced from elsewhere and that local communities had no stake in the developments so that they could potentially become more divisive. Over the lifetime of the various SRB programmes, this started to be addressed with the recognition that regeneration had to be about people more than buildings to achieve the long term sustainability of these initiatives after the lifetime of the programme. These ideas were developed further under Labour’s New Deal for Communities and Neighbourhood Management programmes.
Enterprise Agencies and other business support
In the early 1980s LEAs were set up in many areas. Typically they were partnerships of local authorities, local businesses and other small business networks such as Chambers of Commerce. Local boards were created and packages of funding were put together from these public and private sources. Staff were frequently seconded from banks and other local businesses. The default method of offering business support thus became the banking approach to business start up: ‘write a business plan and convince me that I would want to lend you money’. LEAs were the main source of advice for anyone setting up a small business, particularly as a sole trader.
In 2001 Business Link became the government infrastructure body for business support. By 2006 a national package was offered by regional organisations, of information, a business diagnostic and brokering clients to other forms of business support, for which they might have to pay.
Support for individual businesses
In 1982 the government introduced the Enterprise Allowance Scheme to get unemployed people off benefits and into employment. Recipients had to have been unemployed for 12 months and to have £1,000 in their bank account to invest in their business. They received £40 per week for one year, on top of which they could earn an unlimited amount from the business. EAS was abolished in the early 1990s, 325,000 people used the scheme (Hansard).
The position in 2011
The question now is what is the Coalition government proposing to do to help businesses start and grow in 2011 – a period of public sector funding cuts, high unemployment, and now rioting? A form of EAS has been reintroduced, offering claimants £65 per week for 13 weeks and £33 for another 13 weeks.
Business Link has been abolished and is to be replaced in November 2011 by an on-line information service and a programme of 40,000 volunteer business mentors. Many have asked questions about, quality, consistency and whether these mentors will be indemnified if they offer erroneous advice. Regional Development Agencies (set up by Labour) have been abolished and new Local Enterprise Partnerships (LEPs) have been set up with no budgets to deliver support to local businesses. A Regional Growth Fund has been established, not linked to the strategic priorities of the LEPs and not targeted at disadvantaged communities. Fourteen Enterprise Zones have been announced in potentially high growth sectors.
At a time when there is a desperate need for business support and investment in individuals and communities, we really need to see this government emulate its predecessors and build our collective capacity to develop new enterprises. The current focus is on volunteerism from businesses and the built infrastructure. The lack of expert business support is a real concern as is the lack of support for small, new start businesses. In the 1980s there was a real drive by government to support enterprise that appears to be lacking in a very similar set of circumstances today.
Nicky Stevenson, Principal Consultant, The Guild