The problem with business support.

I was talking with some friends who have been involved in business support activities for over twenty years. I asked them why we seem to get it wrong so often. We have evolved from an enormous Small Business Service and Business Link to trifling Growth Hubs floating in an ocean of thousands of business support providers. Regional Growth Fund money goes unspent and business leaders are left bewildered by the hundreds of schemes that offer the impossible with a guaranteed return to the provider rather than any actual positive and sustainable impact on the business.

Ministers, desperate to show how entrepreneurial they have made the UK, are complicit in a measuring system (jobs or GVA) that is completely anecdotal and gives the service provider the opportunity to exaggerate without any supporting evidence the number of jobs created or, say, the value of export orders predicted. Supporting business growth (the ecosystem as it is called today) is a long term project and as such means that any Minister planting his or her seeds today will not reap any benefits before they move on to some politically more meaningful role and indeed may even end up handing over an opportunity to the opposition.

This is essentially our problem. We don't have a cross party, long term, properly funded programme for business support the same way we don't have it for infrastructure (roads, rail, aviation, ports and broadband). Vital ingredients in the life cycle of small and medium sized businesses are overlooked in favour of the chance to get a picture in the media with a hard hat and a shovel announcing some foreign owned corporation building a warehouse on some recently rescued brownfield.

We don't go anywhere as far as our American colleagues do, where the state is ostensibly the R&D department for a powerful corporate lobby: corporations who do not want to risk the cost of innovation. Mariana Mazzucato has already shown us how governments can assist economic growth by helping businesses grow and in fact if you just tear out the appendix to her book The Entrepreneurial State, you have your strategy on a plate.

Not all businesses want help. Not all businesses have the means by which they can use help. There are too many business leaders wanting something for nothing: a train to gain for business growth. They are unable to manage their own business cash flow and so grab onto any opportunity to bolster their working capital.

How do you identify the right businesses to support? Any centralised system with a CRM and a help desk (or business solutions centre) operated by a university, local authority or Growth Hub is doomed to under perform with dismal market penetration. The business leaders you need to talk to will not beat a path to you no matter how good your bacon sandwiches are or however lucrative the referral fees are. Sorry, I have that wrong: there are plenty of intermediaries who provide great breakfast meetings to delegates that are miles away from the growth businesses we need to identify. When I go to networking events or awards dinners I see the same professional service providers time and time again. The real business leaders are in the office working and I often realise too late that I should be to.

There is an answer. It's not a 10 point plan with two 8s. It hasn't got any pillars. It is very straight forward: do the same to small and medium sized businesses as we have done to HE students. The taxpayer money involved in the grants scheme that my peer group were brought up on is now collateralized into student loans with an interest rate of between RPI and RPI plus 3% on a sliding scale dependent on the income of the former student once they get a job.

Why don't we encourage businesses to borrow whatever they need from whomever they think is appropriate, even the British Business Bank to make an improvement to their business. We do that for home loans and even to those who find themselves a bit short before payday. A standardised business plan can set out the business' needs and an assessment of the proposed capital payback period based on the expected return on investment can trigger a risk calculation and interest rate. Offer a lower rate of interest for the kind of businesses we want to grow (an industrial strategy in a paragraph), for example biotech. electric vehicle and AI companies and a higher one for industries that we don't think we need more of e.g. coal mining. Easy. Businesses can now do all the training, consultancy, new plant, new staff or marketing strategy they need to grow and there are lots of service providers to persuade them rather than the 'Nanny State' making decisions for them.

We can close down all business support that is taxpayer and let the market do the rest. Let the City collateralize the new debt and play with it on the money market so that any risks are mitigated.

Oh, and maybe one more thing: make it mandatory that when a business is created that at least one Director has a suitable management qualification.