Businesses: Regional Growth Fund

Lord Harrison Excerpts

Wednesday 8th June 2011 Lords Chamber

Asked By

[Lord Harrison]

To ask Her Majesty’s Government how many small and medium-sized enterprises have been helped by the Regional Growth Fund, and what other plans they have to help such businesses.

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Wilcox)]

My Lords, about one-third of the £450 million conditionally allocated for successful bids in round 1 will benefit small and medium-sized enterprises. Our expectation is that at least 1,000 SMEs, located in areas where there is not already a vibrant private sector and culture of enterprise, will benefit directly from round 1. The second round of the fund is bigger, and we expect further bids that will benefit SMEs.

[Lord Harrison]

Given that only one-third of the successful submissions are from small businesses, whereas the regional growth fund was designed to help small businesses, does the Minister accept that a flaw in the design of that fund is that you had to submit a minimum bid of £1 million, which is out of reach for many small businesses? Does she accept that the advice on the BIS help site is absurd, given that the proposal that you should spatchcock together lots of different projects from small businesses not only increases bureaucracy but means that projects are brought together which are unnatural neighbours? Is it not time that the Government thought big about small businesses?

[Baroness Wilcox]

I know exactly what the noble Lord is talking about: the threshold value of £1 million seems very high for very small businesses. We recognise that £1 million is too high a threshold for the smallest businesses. Sadly, it would take much time and resource to deal with a very high number of very small bids. We have addressed that point by conditionally allocating funding to organisations with experience of the SME sector, so that they can work with it to deliver the grants. Projects below £1 million can join up with other projects to form a coherent package and can bid together to meet the threshold. I come from a business background and know that if you cannot get a grant or a loan for the business the first time round, you go out there to find another business that will join you so that you can get it. This is a competitive process, which is what we want it to be, and I think it will succeed.