One of the principle drivers in the last Government’s economic policies was targeted regional initiatives. These initiatives were intended to create a more balanced economy by driving regional growth and narrowing the gap between the South of England and the rest of the country. It was hoped that added investment would not only boost regional economies, but would also be of considerable benefit to small businesses.
After the last election in June little was heard about either the ‘Northern Powerhouse’ or the ‘Midlands Engine’ initiatives. Some economists feared that they would be put on the backburner and quietly forgotten. However, following a recent announcement by the Government, it would appear that regional initiatives are back on the agenda, and that must be good news for small businesses.
Government announces regional growth deals, but will these ultimately help small businesses?
The Government has allocated £3.4 billion through growth deals, including £70 million for the Northern Powerhouse Schools Strategy and £13 billion on transport to invest in the Northern Powerhouse. The Midlands Engine has partnerships with 28 top-tier local authorities and 20 universities. Whilst both initiatives are welcome, critics fear that a lack of publicity surrounding both the growth deals and the economic rebalancing strategy could ultimately undermine what the Government is trying to achieve.
Speaking about the recent growth deal announcement, Edward Winterton, UK CEO, Bibby Financial Services (BFS) said:
“Measures [which] aim to close the economic gap between the rest of the country and the South can only be a good thing. For this reason, there has been much hope placed on the Midlands Engine and Northern Powerhouse strategies to drive regional economies through focused investment and skills development.”
However, he went on to express concerns that these initiatives might not have the desired impact. The latest BFS SME Confidence Tracker, (covering the second quarter of 2017) found that 66 per cent of UK small businesses were unaware of the Midlands Engine and 43 per cent were not aware of the existence of the Northern Powerhouse.
What’s more, the latest research from BFS discovered that 32 per cent of businesses in the North West, 25 per cent in the North East and 31 per cent in Yorkshire and Humberside had never even heard of the Northern Powerhouse: even though the Government has stressed that it has been at pains to engage with “businesses and others across the North to consider what more can be done to support the delivery of the Northern Powerhouse.”
The same lack of knowledge surrounds the existence and purpose of the Midlands Powerhouse. The BFS statistics showed that over half the small businesses in the West (51 per cent) and East Midlands (56 per cent) were unaware of the Midlands Powerhouse or how it might benefit them.
The Government must increase awareness of regional growth deals if small businesses are to benefit
Speaking about the lack of business awareness of regional funding for the small business sector, Mr Winterton said:
“It is vital that [small businesses and] SMEs in these regions see tangible benefits from the billions of pounds that have been earmarked, but this must start with awareness of the opportunities available to them and an understanding of how they can benefit.”
He also added that it was important that any regional funding made available should benefit the whole of the region, not just the largest cities in major conurbations. BFS found that in the Midlands, a third of small businesses who were aware of the Midland Engine believed the initiative was far too focused on Birmingham: in the North West, 40 per cent of small businesses believed the Northern Powerhouse to be too focused on Manchester. There was, however, a consensus amongst small firms across the country (66 per cent) that too much investment went to London compared to the rest of the UK:
“The UK very much remains a London-centric economy, but we must redress the balance if we are to create an economy that works for everyone across the country. Improving connectivity, investing in skills and development and creating the right environment for enterprise to thrive and grow are vital in supporting regional economies,” Mr Winterton added.