There is mounting concern that the government’s proposed regional development agencies’ reforms is simply a smoke-screen for the removal of support and funding much needed by new small business bank account holders in the UK.
Paul King, who founded 1-day later, a software company, commented that he was devastated by the proposal. When King and his associates first started his company, they enrolled in a multitude of business courses that were funded primarily through their RDA, and he feels that without its support it would have taken his company much longer to grow to where it is currently. He feels that it is “a real shame” that the next crop of incoming start-ups may face the possibility of not having those resources made available to them, such as information on how to open a business bank account or apply for a business loan.
Chancellor George Osborne’s announcement that the Regional Growth Fund would provide £1 billion in funds is noteworthy because it is significantly less than the RDA-available funds; This year alone, the RDAs had a budget of approximately £1.7 billion.
The CEO of technology corporation Metalysis, Mark Bertolini, commented that even through their Yorkshire Forward RDA, his company secured a grant for £1.5 million in October of last year in order to upscale their technology and to increase and train their workforce, many of whom are residents of the region.
While Bertolini was aware that the RDAs would not be replaced until March of 2012, he urged the government to consult closely with other businesses like his over the subsequent steps. Bertolini added that he felt the government has an obligation to support enterprise and to not act rashly by removing expertise from regions around the country at a time when it has been relying on businesses like his to aid in bringing about recovery in the manufacturing sector.
A report published by the Treasury last year found that regional development agencies were among the top 25 per cent of most efficient governmental departments. A similar study conducted by PricewaterhouseCoopers in 2009 found that for every £1 that was invested in RDAs, the regional economies tied to these agencies saw a return on their investment of £4.50. Another casualty of Osborne’s reforms may very well be the agency for start-ups and SMEs known as Business Link as it falls under the purview of the nine RDAs throughout the country; it may be dismantled altogether, if not heavily cut back from its current levels.
Despite the uproar, there is still confidence that the government can alter the reforms: Sam Turvey of the British Chambers of Commerce felt that it’s not necessarily disastrous. Turvey stated that as long as the first priority is business, the government will have listened to private companies properly.