From the top · 17 August 2015

Chuka Umunna: Government Growth Vouchers programme an “abject failure”

Chuka Umunna at the launch of Small Business Saturday
Chuka Umunna at the launch of Small Business Saturday

The government’s £30m scheme aiming to provide small businesses with expert advice has been criticised after only £3.6m of the total was handed out. Shadow business secretary Chuka Umunna suggested a lack of promotion resulted in the “abject failure” of the project.

The growth voucher scheme was established in 2014 to help small firms pay for expert consultancy, with the coalition calling it a “pioneering programme to help support 20,000 small businesses get the advice they need to achieve their growth potential”. However, it has been deemed confusing by business groups, while Labour said the initiative hadn’t been marketed efficiently.

When introduced, the Department for Business, Innovation & Skills (BIS) said it was a £30m programme which would provide “an immediate cash injection of up to £2,000 for eligible small businesses” to gain guidance in areas including recruitment, finance, leadership, customer retention and marketing. The scheme closed on 31 March 2015, with the government announcing that 2,132 vouchers worth £3.6m had been claimed, with firms receiving £1.2m worth of advice.

The scheme was for businesses with fewer than 250 employees, with successful applicants chosen at random to receive a voucher of up to £2,000. An earlier progress report highlighted that some firms were receiving vouchers but not using them, saying a lack of cash available was responsible for adding their 50 per cent share.

Ministers had hoped around 20,000 companies would take up the initiative, but when the scheme closed there had been just over 7,000 successful recipients. A final figure on the numbers issued will be available at the end of the month, though BIS said that more than 27,000 businesses had contacted the department for advice.

Umunna said: “It appears that not nearly enough was done by BIS to promote and back the scheme, and as a result it has ended up being yet another abject failure, like so many other programmes designed to support small business which we’ve seen from this government.”

The national chairman of the FSB added that there had been a “disappointing take-up and use of the growth voucher scheme”.

The vouchers could be used for advice on recruitment, but couldn't go towards advertising or building a website
The vouchers could be used for advice on recruitment, but couldn’t go towards advertising or building a website

“Too many businesses have poor awareness of what business support is out there, and those that do find it overly vague or too complex to access,” John Allan said. “While we have recently seen welcome progress on providing a more coherent offer at the national level through the Business Growth Service, there remains some way to go before we see a fully integrated and small-business-friendly service.” He said the lacklustre take-up of the growth voucher scheme was just one example of this.

Meanwhile, the deputy head of policy at the IoD suggested the added restrictions on how the vouchers were spent added to the confusion for firms. Jimmy McLoughin said that while he could see the government wouldn’t want to “give blanket subsidies”, the scheme excluded spending which would have helped entrepreneurs grow. He pointed to the fact vouchers couldn’t be spent on building a website, advertising or buying software, “all of which can be vital for early-stage companies”.

McLoughin also mentioned the “short time-frame which was likely to attract only the smallest firms” meant it was tricky to promote and the scheme would “naturally increase in awareness if it was allowed to run for a few years”.

Such vouchers would be of most benefit to startups “and these are often the most difficult for Whitehall departments to reach”. He added that “chopping and changing support schemes” has been a feature of successive governments, which tends to lead to confusion and low pick-up rates from businesses.

BIS said the programme was a research project “designed to test the impact of business support” and would use the responses from the business community as a guide to future plans for similar initiatives.

Image: Shutterstock

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Rebecca is a reporter for Business Advice. Prior to this, she worked with a range of tech, advertising, media and digital clients at Propeller PR and did freelance work for The Telegraph.

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