1. Business Collaboration Networks Helping businesses to work together to improve performance and exploit market opportunities and new knowledge Purpose To bring together businesses, to work on common challenges in fields of commercial activities that are essential for developing and strengthening regional economies. How will this be achieved? By providing a grant to set up and facilitate business collaboration that would: • • • • • •
raise awareness of the benefits of collaboration; identify potential participants; facilitate a meeting based discussion forum on a specific topics; facilitate collaborative work groups on particular topics; recording and dissemination of discussion, information and conclusions reached by the group; facilitate inter-linking of similar collaborative groups in other parts of England.
Why offer public sector support? There may be network externalities and spill-overs from collaboration and at the same time barriers to entering collaboration because: • • •
potential participants may be unaware of the benefits from collaboration; there may be problems internalising the benefits of the collaboration; and participants may not be able to agree how to divide up the benefits of collaboration (because they don’t know what the benefits are).
What will be offered? The subsidy will be to intermediaries to facilitate bringing together groups of new and more established small or medium sized enterprises and relevant key partners in high growth, or sectorally important, or deprived areas to discuss commercial opportunities or ventures. Who will be eligible? Intermediaries – in general, private sector firms or organisations with relevant experience and a proven track record of successful facilitation of business collaboration. Network participants must centre around small-to medium sized firms to attract any public subsidy to the collaboration. Interventions will be restricted to projects where: • • • • •
focus is on activities highlighted in Regional Economic Strategies; market failure and difficulty in achieving collaboration is identified at the project level; collaboration is necessary to develop and commercialise a business proposition that is outside the scope of supported activities elsewhere (e.g. under the ‘Innovation Collaboration’ product); business case demonstrates the absence of subsidy to participating large companies; and such networks will not support anti-competitive behaviour.
Interventions when they are time limited, will have a clear exit strategy established at project inception and will be at a proportionate level of subsidy. The exit strategies will establish how the benefits of collaboration will become apparent and the networks will be able to become self sustaining. Where benefits are not apparent then there will be no value in maintaining the network. In either case the networks can be expected to have a limited time in which government funding is necessary. Timing of exit would be determined by exit criteria and monitoring results.
2. Business Creation Helping to overcome barriers to setting up and growing a new business Purpose To increase the level of enterprise in the UK by supporting the creation of new businesses by enabling those with an interest in starting up in business to take the necessary steps to do so, particularly overcoming barriers faced by some individuals from under-represented groups and disadvantaged communities. How will this be achieved? By providing individuals and new businesses with relevant and timely advice and guidance for successful business start-up, on for example, compliance and regulatory information, business planning (appropriate to the complexity of the business), finance (including small grants and loans and financial skills), business idea development, market research and market understanding, managing and running a small business at start-up, and employing people. This will be provided by Business Link. More intensive support will be provided to the most disadvantaged individuals to overcome barriers to starting up. Why offer public sector support? The creation of dynamic businesses is a key driver of economic prosperity. The level of entrepreneurial activity in the UK, however, is modest in comparison to some other economies. Certain groups, including women, disabled people and some minority ethnic groups, as well as certain geographical areas have a disproportionately low level of entrepreneurship. If these disparities were overcome as well as increasing the overall rate of business creation then entrepreneurial levels could match those of our competitors. The intervention is justified on equity grounds and government failure to provide enterprise education to some groups. In addition, people in some ethnic minority groups may not know where to seek the necessary information about how to start a business; they may not have the cultural or family history or networks to provide such information. For some groups in the population the transition from interest in starting up to running a business is made more difficult because of wider social and structural issues. The issues may become more entrenched without some suitable intervention. There may also be information failures about the risks of starting a business among some women and certain ethnic minority groups which prevent some from these groups with an interest in starting up from doing so. What will be offered? Assistance will be given to individuals and new businesses comprising of a mix of generic advice and guidance that a business needs to be able to start trading concerning: • • • •
business idea development, market research and market understanding, business planning, operations and management, financial planning and management, employing people.
More intensive support will also be available for some, including those from disadvantaged or under-represented groups. This will comprise: • • •
more personalised support from an adviser, coach or mentor who can work with the particular individual or business to overcome particular barriers to starting up; early stage support to ensure survival through mentoring or proactive account management, ongoing business review; limited financial assistance to disadvantaged individuals who face additional disproportionate costs when starting up.
Who is eligible? Generic advice and guidance can be offered to all types of new business, including, for example, entering self employment and single person start-ups, team start-ups, high growth
and high technology start ups, social enterprises start ups. The more intensive offer will be limited in availability to disadvantaged individuals.
3.
Business expertise
Help to get expert advice for targeted small-medium businesses to grow Purpose To improve the performance and productivity of businesses in the UK by providing expertise to help small-medium sized enterprises (SMEs) realize their full potential for growth and success. How will this be achieved? Through mentoring and coaching: • •
at a national level, to meet a national market failure; at a regional or local level to meet market failures that would differ between regions or localities.
Why offer public sector support? The rationale for this intervention varies depending upon whether the underlying problem is national or sub-national. At the national level the intervention would fill in a missing market in business expertise. The intervention would be designed to rectify infrequent but possibly important instances where: • • •
there are major advances in business technologies and processes which radically alter the competitiveness of companies, e.g. lean manufacturing; yet markets for UK SMEs to acquire this knowledge are missing; e.g. due to the uneven geographical distribution of new technology and the industrial concentration of some industries; the intervention provides a means for UK SMEs to acquire knowledge of the technology or process until such time as UK based consultants and others make the knowledge available.
At the regional and local level there may be specific geographically defined reasons why business expertise is not available. The intervention would be directed to rectifying the local market failure. Since the market failure might vary by locality the required type of expertise might differ from those provided nationally. For this reason the type of expertise will be determined locally after appraisal at regional and local levels to determine the existence of a market failure (as set out in the Treasury ‘Green Book’), additionality and value for money. What will be offered? Subsidised access and provision of quality assured business expertise and specialist and advanced skills to SMEs which they would otherwise not have. The expertise would enable the take up of new technologies, techniques and processes. Broader benefits might include: • • •
lower costs; higher productivity; and creation of a market for the supply of mentoring and coaching services in new areas.
The expertise would be provided by an external person or organisation most appropriate to meeting the individual businesses’ needs. The expertise would vary and might be highly technical or specialist including advanced coaching for managing the growth of the business. Who will be eligible? National programmes would target SMEs where there is a: • • •
new technology or business process which is commercially important and materially affects the competitiveness of enterprises; barrier to acquiring that new technology or process, and where the intervention would be successful in creating a market for the type of expertise and the intervention would be time limited.
SMEs would be eligible for programmes targeted at regional and local needs where: • • • • •
local or regional appraisal identifies a market failure; there is a well defined set of monitored exit criteria which would limit the duration of the intervention; and either the recipients are located in a deprived area, or the recipients are high growth or high potential companies, or the recipients are one of the selected few priority sectors in the region.
4. Capital investment grants Help to support capital investment projects either by SMEs or by companies operating in the assisted areas Purpose To encourage sustainable investment and job creation in some of the most disadvantaged areas in England. How will this be achieved? By providing capital grants to promote the expansion, rationalisation, modernisation and diversification of economic activities of businesses located in disadvantaged regions, in particular by encouraging firms to set up new establishments in the Assisted Areas. Why offer public sector support? Between and within the regions there are significant disparities in terms of employment and productivity that have persisted for the last 70-80 years. Business support products within the capital grants offer can help to raise the rate of sustainable growth in the regions by supporting investment and job creation in deprived areas. What will be offered? Financial support - normally in the form of grants though in some circumstances loans - to support investment projects by: • •
all companies located inside the Assisted Areas, and small and medium-sized companies located outside of the Assisted Areas.
In some cases hybrid financial support, (e.g. a grant that becomes a repayable loan if specific conditions are triggered) may also be available. The level of support provided is linked to the amount of capital investment, the amount and quality/skill level of the employment, and the amount of productivity growth associated with the project. Who will be eligible? The provision of public sector grant support is not automatic. Projects are only supported where: • • •
there is strong evidence that the project would not go ahead without support; the project has a good chance of delivering a sustainable productivity improvement; the project is of benefit to the regional and national economy (i.e. it will not simply displace similar economic activity from a deprived area).
Full details on eligibility for public sector grant support are set out in the Selective Finance for Investment in England (SFIE) guidelines.
5.
Debt finance
Security and loan finance for SMEs with viable business plans Purpose To extend the availability of debt finance for SMEs that have viable business propositions but lack the necessary track record or collateral to obtain a loan. How will this be achieved By a dual approach of: (1) Guarantees; and (2) loan provision for SMEs – particularly, less well-established enterprises and those underserved by mainstream providers. Why offer public sector support? There is a need to reduce the barriers to access to finance for SMEs that have viable business proposals, but cannot secure a conventional commercial loan. Finance providers often have little information about the entrepreneur or about the business proposal being championed and have difficulty in distinguishing between high risk and low risk proposals. To mitigate this, borrowers are often required to provide collateral as security for loan finance. Research has shown that mainstream banks perceive the transaction costs of serving some viable business propositions (i.e. time to assess prospective clients, approve them and provide support) as too high relative to the returns. Businesses and entrepreneurs who cannot provide collateral, or demonstrate a track record, can be locked out of the loan market. What will be offered? Enabling the provision of loans up to £250,000 for those businesses with a viable commercial proposition. This will cover debt finance at an appropriate, risk-priced interest rate which reflects the nature of the borrowing enterprises. Drawing on the pre-existing SFLG framework, the intervention includes offering partial Government underwriting of loans from lenders. Who is Eligible? This intervention will be aimed at SMEs – notably, start-ups and young businesses as they find it proportionately more difficult to raise finance than established businesses. It is these groups that are most likely to find it most difficult to provide collateral as security for loan finance.
6.
Export credits guarantee
Helping business manage non-payment risks in overseas markets Purpose To benefit the UK economy by helping exporters of UK goods and services win business, and UK firms to invest overseas, by providing Government-backed guarantees, insurance and reinsurance against the risk of non-payment when such support is unavailable from the commercial market. Why offer public sector support? To complement the commercial market by taking on the medium and long term payment risk due to commercial and political factors in markets where the private market is unwilling to take on those risks or has insufficient risk appetite. Such risks are generally unattractive to the private market because they are long duration and correlated. Government has greater leverage to maximise recoveries in the event of default and can wait longer for such recoveries, compared with private sector agents. The rationale therefore, is that ECGD is more efficient than the private sector. In line with World Trade Organization requirements, the guarantees and insurance will be granted at premium rates that are not below those rates available to borrowers in the international capital market. What will be offered? Helps UK exporters to compete against foreign competitors by • • •
insuring export contracts for the supply of capital goods and services; providing loan guarantees to financial institutions so that they can finance exports; insuring investments in overseas projects.
Who will be eligible? Any person operating in the UK, who is exporting capital goods and services or is investing overseas, is eligible to apply for cover. Acceptance is subject to rigorous risk assessment of the exporter and buyer.
7.
Financial awareness and capability
Providing SMEs with the skills and expertise to secure private sector funding Purpose Increase levels of businesses accessing the most appropriate finance for their business. How will this be achieved? By: •
providing enterprises with the relevant skills to transform their business propositions into investable opportunities; and
•
assisting enterprises in the introduction and interaction with potential investors where a business seeking finance understands the expectations of investors and can present a proposition which can attract investment.
Why offer public sector support? To ensure that many more enterprises are able to take advantage of the increased supply of finance, it is important that they have the skills to develop appropriate funding strategies, understand what investors look for in an investment proposition and present robust investment propositions. This lack of skills can impede the start-up of potentially viable businesses, and for existing businesses, constrain their growth potential or cause businesses to be undercapitalised, affecting their chances of survival. The intervention would address the failure of government to provide adequate awareness of the alternative sources of finance and the requirements to apply successfully for the best type of finance. The intervention will improve small businesses access to finance, and enable additional business formation and growth to be realised, that would otherwise be forgone. What will be offered? Support comprises a combination of specialist information and expertise, comprising: •
•
the provision of in-depth advice and specialist support, combining finance readiness (as a means of straightforward financial advice/business planning for enterprises, including debt finance) and investment readiness ( a more intensive service largely focussed on equity options). mentoring and intermediation, helping to introduce enterprises/entrepreneurs to appropriate financiers.
As a range (and by no means exhaustive), financial and investment readiness can be seen as: i. ii. iii. iv.
adopting appropriate funding strategies; understanding the expectations and requirements of investors; transforming a business proposal into an attractive investment opportunity; accessing finance providers to present investment propositions, in particular, accessing providers of modest amounts of equity based risk finance that are not part of the ‘everyday’ financing landscape of enterprises.
Who will be eligible? Eligibility criteria are to be determined.
8. Getting the most from foreign direct investment Increasing the contribution of foreign direct investment to economic activity in the UK Purpose To increase the contribution of foreign direct investment to economic activity in the UK, including Research and Development (R&D). How will this be achieved? By providing strategic engagement with overseas owned companies about initial investment or partnerships, or continued growth and development of business based in the UK – for example, through partnerships, capital investment and supply chain linkages. Why offer public sector support? Knowledge spillovers from inward investment contribute productivity benefits to the UK which are not fully internalised. Inward investment, in the UK, would also be hindered by network and intermediation failures which act as barriers to entry for overseas firms. What will be offered? A mechanism for gaining understanding of inward investors’ perceptions and concerns about the UK as a place to do business, and give inward investors a ‘voice in Government’ on policy issues affecting their business. Information, advice, and tailored help would be provided for potential and existing inward investors, to help them with the decision to invest in the UK and, once invested, to develop their UK based business. This can relate to any aspect of business relevant to the high level aim of increasing the contribution of foreign direct investment to economic activity in the UK, including R&D. The types of assistance to be provided are as follows: •
• • • •
• • • •
provision of persuasive value propositions tailored to the overseas headquartered company’s own development plans seeking to persuade the company of the benefit of locating in and growing from a UK base internationally, including visits overseas to make business case for investing. provision of general or tailored information specific to influencing a favourable investment decision – including detailed property searches. facilitating access to the huge R&D resources present in the UK, as well as technology best practice schemes, to bring added value to both UK and international operations. brokering links between inward investors and UK university and FE colleges to facilitate more effective partnerships in developing demand-led training courses and work placement schemes, and opportunities for graduate recruitment. ongoing strategic discussion with companies to help existing inward investors businesses develop and grow. Advice on the regulatory framework in the UK, and how best to work with legislative bodies; as well as a selective 'trouble-shooting' to help investors with specific UK regulatory or legislative concerns that are impacting adversely on their competitiveness. assistance with immigration issues; i.e. assisting client transit through UK borders and occasional selective direct intervention with immigration authorities. introduction to national and regional process improvement initiatives and innovative production techniques to help clients remain internationally competitive (to be consistent with the support provided under the Business Expertise product). provision of advice to identify available labour with appropriate skills, achieve successful recruitment and develop and retain clients’ workforce, including assistance with relocating of staff. provision of information and signposting to services that contribute positively to perception of the UK as a place in which to grow an inward investor’s business, addressing information market failures.
• • • • • • • • •
provision of advice to attract overseas based entrepreneurs and early stage technology businesses to the UK. organisation and hosting of tours/visits to regions/UK by potential inward investors and overseas multipliers to demonstrate location strengths. understanding of inward investors’ perceptions and concerns about the UK as a place to do business, and providing inward investors with a voice in Government on policy issues affecting their business. help and assistance to overcoming language and cultural barriers to investing in the UK. liaison with private sector companies including property and construction firms and financial and professional services to help inward investors to start successfully. provision of information and advice on financial assistance, funding or support grants and access to private venture capital - and assistance in applying for these. developing exports – market information and introductions to potential partners. supply chain development and manufacturing efficiency (to be consistent with the support provided under the Business Expertise product). connecting and communicating with Government and its departments.
Who will be eligible? All types of assistance will be available to sources of Foreign Direct Investment which have not established a foothold in the UK. Those who already have a foothold in the UK should not receive assistance additional to that available to UK based companies, as provided through other products.
9.
Innovation Collaborations
Help for companies to work together with the science and research base to increase innovation Purpose To stimulate productivity and economic competitiveness through increased UK innovation within businesses. How will this be achieved? By incentivising and facilitating increased knowledge exchange and encouraging technological diffusion between businesses and knowledge base institutions (see Note 1) through increased collaborations. Why offer public sector support? The UK lags behind its major competitors in capitalising on scientific discovery and technological advancements by turning them into successful commercial products and services. Through its support to knowledge institutions Government has a responsibility and role to play in supporting research and development in technologies that are at a very early stage of development, or which mainly benefit society as a whole. In addition, businesses can under-invest in certain types of research and development due to concerns about spillovers and being able to capture the wider benefits. There are potential external benefits from collaborative research and development. However, many businesses often lack effective mechanisms to develop collaborative working relationships with other businesses and knowledge institutions which leads to the under–development of new ideas. What will be offered? •
Networking for Innovation
Funding for business-facing networks to encourage businesses to build relationships with other businesses, intermediaries and universities to improve knowledge exchange and innovation. Interventions will be proportionate and time limited through well defined exit strategies. •
Partnerships for Innovation
Placement and funding of an under-graduate or graduate from a knowledge base institution in a business to share skills and expertise of value to the business via a strategic project. Exchange of staff between businesses and knowledge base institutions. •
Collaborative research and development
Collaborative research and development activities where a business works with another business and/ or with knowledge base institutions, to develop key technologies for future needs or for radically new products involving the embedding of key technologies. Large scale demonstrator projects that promote the potential of key technologies to a regional or national business audience. Who will be eligible? •
SMEs, larger companies and knowledge base institutions engaging in placement and exchange secondments (see above), collaborative research and development activities or collaborative demonstration projects;
•
Intermediaries to reduce set up and administration costs of networks which allow businesses to pursue innovation collaboration projects that have the most benefit to the economy.
Note 1. Includes UK Public Sector Research Establishments (PRSE) or equivalents, Research and Development Organisations (RDO), Research and Technology Organisations (RTOs), Higher Education and Further Education Institutions.
10.
Innovation finance
Help to develop and commercially exploit innovative ideas Purpose To stimulate productivity, environmental sustainability and economic competitiveness through increased UK innovation (i.e. exploitation of 'new' ideas) within businesses; and to encourage businesses to innovate and realise the benefits of innovation for the business, and more widely for the economy and the environment. How will this be achieved? By providing financial assistance to increase businesses ability to engage in a range of earlystage research and development (R&D) activities in potentially important fields, but where there are significant risks and uncertainties around the expected results and ability to secure commercial benefits. Why offer public sector support? Government funding can act to extend the UK’s portfolio of research or development projects by supporting firms directly with promising lines of development, which have fallen at the risk aversion or due diligence hurdles in private capital markets, and where the problem is not rectified by the debt and risk finance interventions. That is, the state takes on a limited risk pooling function to increase the share of national resources devoted to innovation progress, but distributed across a wide range of relatively small firms, increasing the spread of opportunities "sampled". What will be offered? Grants / loans will be available for single UK-based businesses (mainly SMEs) who are unable to bear the full cost and to secure sufficient finance to develop technology based product, process, or service innovations. Grants / loans will assist with the cost of: • • •
research and development by the business, including obtaining intellectual property rights, 'proof of concept', market research, and capital expenditure linked to prototyping and large scale demonstrators; using third parties, such as consultants, patent agents to undertake the above activities; demonstration projects involving the early adoption of new technologies with a potentially significant environmental benefit, such as to promote low-carbon energy technologies and the better use of energy.
Who will be eligible? Grants / loans would be given to UK-based pre start, start ups and SMEs engaging in Research and development projects in technologies or applications of national or regional importance. Although grants / loans are available mainly to SMEs, larger companies with environmental demonstration projects are also eligible. Assistance will be provided as a grant / loan to reduce administration costs and allow businesses to pursue projects that have the most benefit to the economy and the environment.
11.
Investigating new overseas markets
Tailored help for specific markets Purpose To strengthen UK productivity growth and future economic prosperity by overcoming barriers faced by UK businesses and sectors in specific overseas markets, which would otherwise limit the benefits gained from international trade. How will this be achieved? Provision of tailored information and help for UK based companies and sectors to overcome barriers to business in specific overseas markets. Why offer public sector support Access to potential opportunities in markets for differentiated products and services depends significantly on information flows mediated through social networks, and in some sectors also through government to government networks. Firms or sectors seeking to enter a new market face barriers in gaining access to the relevant networks and information if they do not have support from a trusted intermediary who can facilitate access to appropriate contacts. Reputation benefits of promoting and showcasing UK capability are not fully internalised by individual firms, and warrant public subsidy. What will be offered? Tailored information and other help in specific markets, for individual companies and for sectors or other groups of UK business for collective benefit, drawing on the commercial sections in UK Consulates, Embassies, and High Commissions overseas. Tailored support is normally charged, for all sizes of firm. Limited financial support towards the cost of participating in overseas visits and trade shows is available to eligible SMEs. Support will comprise: •
• •
Charged services can include tailored information or help in gaining access to key contacts, either for individual firms or through group events. Services provide individual or groups of companies with information on local market conditions, market entry strategies, or help in gaining access to key contacts, or in overcoming barriers to market access; Grant packages to cover part costs of participating in overseas missions; Grants towards exhibiting at Overseas Trade Shows for eligible businesses.
Who will be eligible? Support for market introductions is open to all UK registered companies. Support for market visits or for exhibiting at overseas trade shows – businesses falling within the EU definition of an SME and working with one of UKTI’s International Trade Advisors or equivalent and engaged in a trade development activity. Support for sector events and for group delegations to overseas exhibitions is prioritised in accordance with high level strategic priorities identified, and in accordance with strategic marketing plans for individual sectors.
12. Local community business coaching Helping hard to reach communities to start up in business Purpose To ensure that all people with potential, regardless of background, have the opportunity to start a business, and to promote enterprise in deprived communities in the UK. How will this be achieved? By providing local community based business coaches to promote self-employment, social enterprise and increase business creation and survival specifically to members of social groups under-represented in business start-up and enterprise, that is, people in deprived communities with low levels of business creation who face more and multiple barriers to enterprise. Local Community Business Coaches will work in partnership with relevant partners involved in business and employment services. Why offer public sector support? The intervention is based on equity grounds. The Government’s enterprise objective is to ensure that anybody with the potential to succeed in business should have the opportunity to do so. But levels of enterprise in deprived places are significantly and persistently lower than in more affluent areas. Self-employment in the most deprived areas is half the rate of England as a whole. Certain social groups are also poorly represented in enterprise. For example, female entrepreneurship is less than half the level of men; certain BME groups have relatively low levels of self-employment; entrepreneurial activity is markedly less common among those who are registered disabled and who have a disability that limits their ability to carry out paid work. The reasons for this are complex but evidence suggests that the lack of an entrepreneurial culture in certain places and among certain social groups; and the lack of family or professional support available or affordable to such people, are contributory factors. Yet the potential rewards are high - if the highest rates of business activity in the UK were matched in deprived areas ‘there would be an extra 154,694 businesses in the UK. Furthermore, if the UK matched US enterprise rates there would be an extra 1.9 million businesses. What will be offered? Intensive customer-facing pre-start up support and advice aimed at deprived communities and in particular disadvantaged individuals. Coaches will do this through: • • •
Outreach - targeting local community venues, such as societies, schools and faith groups etc, demonstrating the advantages and opportunities of enterprise and the availability of appropriate support. Facilitating local connections within the community, and help and encourage budding entrepreneurs to navigate their way through multiple business, employment and skills services provided by different public and other bodies. Aftercare – being there to offer ongoing reassurance and advice in the crucial first stages of business creation, tailing off once the client is sufficiently confident in accessing mainstream and private sector services without assistance.
Local Community Business Coaches will provide counselling and coaching services in the heart of a targeted community - usually through an experienced entrepreneur or adviser with some experience of giving advice and support to businesses appropriate to that community. The counsellor would proactively engage with the community, particularly those groups and individuals most disadvantaged. They would also make contact with local businesses and promote connections within the local community. They will provide specialist information, guidance and advice by making links with key social and business support organisations to assist the potential entrepreneur move from claiming benefits to starting a business. Support under this intervention will be limited and the client will be expected to engage with mainstream business support services within a reasonable period, however, the local coach will remain accessible to the client for some limited aftercare and expertise. Who will be eligible?
The target groups for this product are disadvantaged individuals. Specific eligibility will be determined locally but is expected to be limited to deprived areas (i.e. within one of the 88 most deprived wards according to the IMD) and/or linked to specific types of deprived community such as deprived rural, coastal, coalfields and deprived urban.
13.
Preparing to export
Help for businesses considering first time exporting or entry into new overseas markets Purpose To strengthen UK productivity growth and future economic prosperity by ensuring that UK businesses, especially high productivity, innovative, and research and development (R&D) intensive businesses, are able to identify and exploit opportunities in overseas markets successfully, and to respond rapidly and effectively to changing international opportunities. How will this be achieved? By providing information and advice to businesses considering exporting or entering new overseas markets, or who have limited experience in exporting or other aspects of international business development, and need help to develop the requisite knowledge and capabilities. Why offer public sector support? Public sector intervention is justified by the wider benefits from the dissemination of knowledge about exporting that are not necessarily internalised by companies, and hence warrant some subsidised public support to ensure these accrue to wider business community and the UK economy. What will be offered? The specific types of assistance to be provided are: •
•
Information and advice (including referrals) to UK registered companies who are: considering exporting, entering new overseas markets, developing international business (for example, through supply chains, partnerships, licensing, increasing inward investment by overseas companies and investors) in new overseas markets, bidding for development aid contracts and/or Limited part-funding to invest in capabilities generally to export, and undertake export market research.
Co-funding is available for projects as part of an export capability development plan which enable companies to develop their export capability based on a strategic assessment of their strengths and weaknesses. Who will be eligible? • •
14.
Information and advice on beginning to export or seeking to do business in new overseas markets – UK registered companies of all sizes. Co-funding for agreed export capability development projects - for small-medium sized enterprises seeking to enter new markets. Support for general export capability development is restricted to SMEs who are either ‘new to export’ or innovative and between 1 and 5 years old.
Protecting the Natural Environment
To encourage businesses to adopt measures that reduce the negative and promote the positive impacts of their commercial activities on the natural environment. Purpose To restore, maintain and enhance a healthy resilient natural environment that will benefit human health, wellbeing and economic development, now and in the future. How will this be achieved? By engaging businesses proactively in this area, encouraging protection of the natural environment, enhancing diversity of species and securing at risk habitats, through promotion of recognisable and tangible benefits. Why offer public sector support? The benefits of a healthy natural environment are felt by all citizens and the natural environment provides a huge range of services for everyone. These include basic resources for survival such as clean air and water and healthy food, through other primary production, to the cultural and wellbeing benefits of green space and access to biodiversity. Businesses can undertake actions within the market to reduce negative impacts or provide beneficial outcomes. However, they may face market barriers e.g. high transaction costs; lack of clarity over tradable goods in a complex market; time and spatial mismatches in environmental services that inhibit trade between buyers and sellers. What will be offered? • Specialist Information and advice (up to 7 hours per intervention per business) delivered through events, technical articles, web-based information and transactions; online self-assessment tools; telephone helpline and hard copy information packs. • Expertise provided through on-site visits (up to 7 hours per intervention per business) • Finance Funding through agri-environment schemes (up to £1,000,000 per intervention per annum per business). Who will be eligible? Customer feedback demonstrates that businesses prefer to receive face to face advice on a one-to-one basis. Where this is not on offer they value half day/full day visits and/or events and the provision of effective information, diagnosis and brokerage. Evidence demonstrates the effectiveness of this intervention in terms of changing business behaviours and delivering environmental benefits. Effective detailed advice is best delivered via experienced advisors who specialise in the particular production methods (e.g. organic), sectors and enterprise types. The majority of businesses use IT to assist in the running of their business so offering online advice, guidance and e-services provides a good fit. E-services can reduce farmer transactions by around 45 minutes (or 15% of time spent form-filling) per business. This reduces the burden of paper alternatives and offers added value and improved user experience, resulting in increased compliance with regulation, including environmental requirements.
15.
Resource efficiency and sustainable waste management
Help and incentives to create a low carbon economy and tackle climate change Purpose To reduce the impact of businesses on the environment and contribute to tackling climate change in cost effective ways that can also help business efficiency and long term competitiveness. Why offer public sector support? Provision of support to business to encourage or enable reductions in business sector emissions, the use of water, energy and raw materials procured, consumed, and produced improve waste management and minimization practices and promote the move toward a lowcarbon economy. Evidence from the Stern report and elsewhere, suggests that businesses are not installing energy and resource efficient measures despite the potential savings to be realised. The reasons for this include lack of time, the perceived small return at the firm level, higher priority calls on a limited budget, and lack of expertise within the company. These are examples of possible mismatch between private and social benefits and costs to due to external costs and benefits to others from private actions. This is often the result of businesses being unaware of the environmental risks, how best to reduce waste and improve energy efficiency in ways that minimise costs, without having a negative impact on business operations. There are significant cost and efficiency gains that businesses can take advantage of through improved resource use. What will be offered? Promotion of the business investment benefits of resource and energy efficiency and improved waste management through offering practical help and highlighting the effects of waste crime. Provision of support to networks (such as trade and professional bodies), intermediaries and businesses is intended to achieve the following outcomes: • • • • • •
stimulate a decrease in the amount of energy, natural resources and raw materials used; reduce the amount of waste created; encourage reuse of materials considered as waste; increase recycling; encourage take-up of environmental standards; increase understanding of, and compliance with, relevant environmental legislation and deployment of new and emerging environmentally friendly technologies.
The specific support provided is as follows: • • •
specialist Information and advice delivered through for example events, networking, technical articles, web-based information; online self-assessment tools; telephone helpline and hard copy information packs. expertise provided through for example on-site visits, networking. finance entailing grants or loans
Who will be eligible? It is aimed at all those whose business activities which use water, energy and raw materials and produce waste, in all sectors. Target audiences are those with significant potential for reduced energy consumption, resource use and waste generation (e.g. construction, manufacturing, retail, the recycling sector). In addition, process industries; food and drink; catering; glass and glazing; facilities management .and social enterprises that own or manage
assets, such as leisure trusts and development trusts. This will be tailored to ensure small and medium sized businesses are able to benefit fully from the offer.
16. Risk capital targeted at the equity gap Equity financing for high growth SME businesses Purpose To reduce the equity gap, in particular, increased levels of: • • •
private sector investment in the equity gap skilled investment professionals operating within the equity gap; and high growth business start-ups within the economy.
How will this be achieved? By improving high growth SME access to private sector finance by levering in public sector capital, where risk is shared. Why offer public sector support? The market does not currently provide an efficient level of equity-based finance to smaller businesses seeking only modest amounts of capital. This represents a barrier to successful investment, innovation and growth in SMEs with significant growth potential that hinders improved levels of enterprise and productivity growth in the UK. An equity gap arises because the costs of making equity investments do not vary proportionately with the size of investment being made, and can be prohibitively high in the case of smaller investments. The relative costs of assessing potential high growth projects can be significant when the costs of identifying potential investees, evaluating the prospects, ensuring suitability for investment, and subsequent performance monitoring are taken into account. There is thus a co-ordination failure until such time as venture capital firms have entered the market and these costs to SMEs are reduced. Evidence indicates that this “equity gap” is estimated to be particularly acute for investments between £250,000 and £2million. A partnership approach would provide an opportunity for fund managers to gain expertise and develop innovative methods for assessing applications and managing portfolios of investments where there is currently a funding gap. This should help to reduce the market failure in the longer run by changing market knowledge and behaviour and demonstrating commercial returns. What will be offered? Provision of commercially viable equity funds by investing a combination of private and public money in small high-growth businesses that are seeking up to £2million in equity finance. Who will be eligible? The specified provision is up to £2m risk capital as this is currently where evidence (see Note 1) indicates that the equity gap has the greatest impact for businesses wishing to attract initial investment. This represents a particular barrier to successful investment, innovation and growth in SMEs, hence the specifications stipulation on SME business size. Only schemes where there is a mix of public and private partnership should be allowed. Private sector funds to constitute at least 33% of the total fund and be genuinely at risk – subordination should not allow private investors to ignore the need to invest wisely. Note 1: Bridging the Finance Gap: next steps in improving access to growth capital for small businesses, HM Treasury/Small Business Service, 2003.
17.
Shared business support environments
Shared business premises and facilities in which businesses develop and grow Purpose To facilitate business growth and to create a larger number of sustainable businesses which will positively impact on the highest priorities for developing and strengthening regional economies including disadvantaged areas. How will this be achieved? By providing new or existing businesses with cost-effective, managed workspace such as business or science parks, incubation units, and provide access to specialist equipment in which to set-up, test and commercially exploit new ideas. Public sector investment in individual shared business premises will be on a time-limited basis with a clear exit strategy from the outset. Why offer public sector support? The intervention will be provided on a regional or local level where there is an identified market failure or equity rationale at this level. Shared business environments can help provide a supportive environment in which to nurture and grow sustainable businesses (including through access to new ideas and technologies) within the highest priority areas of the relevant economic strategy What will be offered? Provide funding to intermediaries to build, operate and manage business premises with shared facilities (which may include technical facilities) and services for groups of new and/or growing businesses. These facilities will be characterised by having flexible tenancy and access arrangements. Businesses will be able to access, cost-effective supportive shared premises and facilities. The exact range of facilities will depend on the purpose and complexity of the services to be offered (e.g. managed workspace, incubators, specialist equipment, science parks or shared pilot plants). Best practice, however, would be for each physical entity to have a ‘manager’ to facilitate access to: • • • •
general information, guidance and advice on business support issues, particularly for the start-up businesses provided by Business Link and other providers; specialist advice and guidance on defined specialist areas; expertise - particularly coaching and mentoring in order to encourage sustainable business growth; and encourage collaborations between participating businesses.
Who will be eligible? To be eligible for tenancy businesses must display entrepreneurial and growth potential and match the purpose of the facility. The target customers are potentially wide and will include start-ups; inward investors; SMEs. In some cases large companies can act as the anchor tenant on a large business/science park but these companies will not receive subsidy. Support will be time-limited by a well defined set of exit criteria. These developments are typically aimed at start-ups and other young businesses which have a higher probability of failing than an existing business and the need to provide more space for communal areas, or technological or other relevant facilities which reduce the amount of rentable space available to the developer. They can, however, also provide more established SMEs with access to new ideas, technologies and processes Appraisal will be at the project level using the Treasury Green Book criteria.
18.
Skills solutions for business
Helping businesses to improve the skills of their employees and individuals to improve their skills for business Purpose Improve productivity, business performance and individual achievement through investment in the skills and competencies of the workforce and potential entrepreneurs, helping the UK become a world leader in skills by 2020. How will this be achieved? Through high quality, responsive public, private and third sector provision delivered across England. Why offer public sector support? The UK’s workforce is poorly skilled compared to major competitor countries and will not be in a position to compete within a global economy in the years to come. The principal argument for government intervention in supporting businesses train their staff is that some of the benefits of employer investment in training is captured by others, particularly when investing in the training of the least skilled and qualified. Part of the solution is for employers to be supported in realising the business benefits in investing in skills solutions, but also in being supported to the right solution through brokerage. UK entrepreneurial activity is also low in the UK compared to that in other countries in part due to lack of practical skills for business, particularly amongst certain social groups resulting in the under-performance of many businesses and poor outcomes for low-skilled individuals in terms of social inclusion, employment and earnings. There is, therefore, a strong equity case to improve the skill levels of those who are economically inactive or from disadvantaged groups – and for whom a lack of basic skills acts as a barrier to start up. What will be offered? From April 2009, through an integrated brokerage service or directly through providers, employers and potential entrepreneurs will have access to high quality advice and guidance to create a skills solution that best meets their needs. Support will be available to all employers, including those from disadvantaged groups or areas. Support will be available for: •
• • •
businesses of all sizes with low skilled employees, support to help them gain their first basic skills qualification, first full level 2 qualification and, depending on sector and geographical location of organisation and chosen provider, subsidies for subsequent qualifications to update skills or gain a more technical and specialised qualification, including first level of management; businesses with 20 to 250 employees, subsidised support for owners/managers to develop their leadership and management skills at various levels; individuals needing higher level skills subsidised support for individuals to achieve first full level 4, depending on sector and geographical location of business and chosen provider; and potential entrepreneurs from under represented and economically disadvantaged groups to help them gain the skills and awareness required to start a business, including appropriate language skills and skills to realise the opportunities for social enterprise.
Specialist support will also available to encourage innovation in the workplace. This will include knowledge management, intellectual property management, sharing best practice, exploration and introduction of new technologies. Who will be eligible? All employers will be eligible, although the focus will be on those employers who would not otherwise have engaged in training or those from disadvantaged groups or in deprived areas. Skills support will also be available to disadvantaged individuals who have an identified potential for enterprise.