What Does the Industrial Strategy Mean for Growth Hubs?

It is difficult to know what to make of the statements about growth hubs in the Industrial Strategy. After a challenging few years for the business support world, it’s great to see the words ‘continued funding’ used with reference to any business support policy. I was really pleased to see this commitment to growth hubs in the Industrial Strategy but as I’ve reflected on the statements and looked again at the wording I’m left feeling a little unclear about what this could mean in practice.

Anyone involved with the growth hub agenda will know that they have a pretty tough brief.  When growth hubs were established they were asked to do a range of things to help improve the coordination and delivery of business support:

  • Influence the design and delivery of business support services: although the commercial market for business services is very active, private sector services do not always fully align with business needs. Growth hubs are expected to influence existing provision and where necessary, fill the gaps.
  • Ensure services are accessible to businesses: the complexity of the business support landscape means that, in many areas, businesses find it difficult to identify and access the right support services.  Signposting businesses to appropriate support is a central role of growth hubs.
  • Generate demand for support services: some businesses are not convinced of the case for investing in external support services and there is some evidence that this could hamper their performance. Growth hubs are expected to develop and maintain relationships with businesses and encourage them to take up external services. Either by working with them to explore their needs and identify providers or providing subsidised support to help demonstrate benefits.

The challenges that growth hubs face

Despite these wide-reaching expectations, the steer from government on which areas growth hubs should focus on and how they should seek to address these challenges was unclear. In theory, this flexibility provides an opportunity for LEPs to tailor their respective growth hubs to respond to local needs. Yet, in practice this was often hampered by the funding available.

Core funding has been limited and often short-term. This has made it difficult to develop the strong local presence needed to influence the coordination and delivery of services. To counter this, many growth hubs sought to boost their resources with ERDF or RGF.  This helped strengthen their local presence but meant that they needed to manage and deliver their own services at the same time as working to coordinate and influence services provided by others.

This has been a difficult balance to strike, particularly in areas where the business support landscape is already crowded.  By setting up yet more services, some growth hubs have been seen to add to the problem they were asked to solve.

The situation has been exacerbated in some areas by the targets such as businesses assisted and jobs created that come with ERDF/RGF funding. The 3 hour assist in the current ERDF programme has helped but many growth hubs have still found themselves needing to deliver a lot of more intensive assists. Without careful management, these targets can disincentive the referral activity which is so important to a growth hub’s coordinating role. It is easy to see how competition between services can emerge in a crowded business support landscape where funded services have targets to meet. Competition gets in the way of coordination and undermines good-will between providers. More importantly, it makes it more difficult for businesses to access the right support and it can act against the public sector’s efforts to stimulate and engage with the commercial business support market.

What will the future role of growth hubs be?

All of these factors have made it difficult for some growth hubs to make headway as influencers and coordinators of support. But, looking on the bright side, the delivery-focused growth hubs have generally achieved a good level of penetration into their local business bases. This could turn out to be a key platform on which to deliver elements of the Industrial Strategy, in the coming years.

BEIS want to work with and improve the performance of the long tail of lower productivity firms. Growth hubs are well positioned to offer access to and insight about these businesses, their support needs and how best to engage with them. It isn’t entirely clear whether this is what BEIS have in mind. I would hope that the planned review of business support will provide some clarity on:

  • The role of growth hubs: the Industrial Strategy talks loosely about the growth hubs needing to bring public and private partners together, build reach, join up and help business access support. BEIS needs to go further than this and be specific about the strategic and delivery functions they expect from growth hubs.
  • Funding streams: once their role is clarified, BEIS should make sure that the funding available is adequate to the task at hand and does not shift focus from core functions.
  • Local approaches: LEPs, through their local industrial strategies (LIS), should still have flexibility to design models which reflect local needs and existing approaches.
  • Realistic timescales: sustained effort is required to resolve the complex and long standing problems and the short-term funding cycle has made strategic influence even harder to achieve.

SMEs play a crucial role in the UK economy and the Industrial Strategy rightly highlights the importance of effective business support in maximising their performance.  I just hope the proposed review will set out a clear plan for how growth hubs can make a meaningful to contribution.

 


Relevant Projects

  • Boost Business Growth Hub interim and final evaluation (Lancashire County Council)
  • Evaluation of the Thames Valley Berkshire Growth Hub (Thames Valley Berkshire LEP)
  • Black Country Growth Hub Evaluation (Black Country LEP)
  • Velocity Growth Hub Evaluation (South East Midlands LEP)
  • Liverpool City Region Growth Hub: The Way Forward (Liverpool City Region LEP)
  • Coventry and Warwickshire Business Support Study (Warwickshire County Council)

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