Financial Assistance to Industry

Paul Scully Excerpts

Monday 24th May 2021 General Committees

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Paul Scully)]

I beg to move,

That the Committee has considered the motion, That this House authorises the Secretary of State to undertake to pay, and to pay by way of financial assistance under section 8 of the Industrial Development Act 1982, compensation to Business Schools in respect of a proportion of the indirect costs of funding the Help to Grow Management programme up to a limit of £220 million over three years.

It is a pleasure to serve under your chairmanship, Mr Gray.

The UK has a long-standing productivity challenge. We are home to some of the world’s most innovative firms, but we also have a long tail of less productive firms compared with other G7 countries. In 2017, the Office for National Statistics estimated that labour productivity was on average 18% higher in the other six members of the G7. To put that in context, increasing the productivity of UK small and medium-sized enterprises to match that of those of Germany could add up to £100 billion per annum to the economy. There is strong evidence that the adoption of formal management practices and of technology are key drivers of firm-level productivity.

The new Help to Grow Management programme announced at the Budget will tackle those issues head on by supporting 30,000 small and medium-sized businesses across the UK to learn new skills, reach new customers, and boost their productivity and international competitiveness. The Help to Grow Management programme is a new mini MBA-style programme that is aimed at senior executives. Launching in June, it aims to support 30,000 SME business leaders over the next three years. The 12-week course, which will be delivered by the UK’s leading business schools, is designed to be manageable alongside full-time work. It will combine a practical curriculum with one-to-one mentoring from a business expert, peer learning sessions that give businesses the opportunity to learn from one another and ongoing support from an alumni community.

By the end of the programme, participants will develop a tailored business plan to lead their business to its full potential. Around 9,000 businesses have already expressed an interest in participating in the programme. Businesses can register their interest at www.gov.uk/helptogrow. Applications have already opened for the first cohort, beginning at the end of June, and businesses and social enterprises from across all sectors are welcome to apply. The programme is open to senior leaders and directors of businesses with between five and 249 employees that have been trading for over a year.

The programme will be delivered by leading small businesses, and business and enterprise experts from the UK’s leading business schools, with the support of leading figures from industry and experienced entrepreneurs. Participating business schools will have been accredited by Small Business Charter, an award that recognises high-quality, tailored guidance to support small businesses and their local economies. That approach brings a huge amount of expertise and experience to the scheme to ensure its success. There are currently 33 business schools with SBC accreditation, and a further 33 schools are expected to seek accreditation.

We recognise the challenge of reaching 30,000 SMEs over three years. I am pleased that we have the support of many business organisations, including the CBI and the Institute of Directors, which will help us to reach their members.

The programme has been developed with the support of an expert advisory council of senior business leaders who are helping to shape the approach and to design the curriculum. They will act as advocates of the programme. The council includes the CBI president, Lord Karan Bilimoria, the NatWest CEO, Alison Rose, and the managing director of Goldman Sachs, Charlotte Keenan. The council provides expert insight to ensure that the programme is practical and relevant to the needs of small businesses.

Help to Grow Management is an ambitious programme. We are confident that it will provide significant benefits to small and medium-sized businesses, helping them to seize every opportunity to grow. The initiative is an important component of the Government’s plan for jobs that will promote opportunity, boost employment and help to level up the economy as businesses recover from the economic impacts of the pandemic. The Government have worked at pace to provide an unprecedented and comprehensive package of support to help as many individuals and businesses as possible. During this challenging period, we have provided access to over £74 billion through the coronavirus loan schemes. I commend the motion to the Committee.

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[Paul Scully]

I welcome the hon. Lady to her place. I know that there will be plenty of opportunities for she and I to discuss this and many other issues in the time to come. I also send my best regards to her predecessor, the hon. Member for Newcastle upon Tyne Central (Chi Onwurah), with whom I had fruitful debates, often in this very room. The hon. Lady and I will get to know each other and Committee Room 10 quite well in the coming months.

This is not considered to be a coronavirus-related measure. It looks at the wider aspect of productivity under the Act. I hope that answers the hon. Lady’s question in that regard. The course is 32 hours of formal training, to be delivered over three months, accompanied by peer learning and one-to-one mentoring, and participants will also be able to join an alumni community. I therefore believe that the course offers value for money for the recipient, who will be asked to pay 10%—£750—as a joining fee. Equivalent executive education programmes can cost up to £10,000 per participant.

[Seema Malhotra]

The 32 hours has been published in the description of the programme, but there are also other taught hours, perhaps for case studies. I was just trying to understand what the full expectation would be of tuition hours—where an academic or speaker will be involved in delivering some of that tuition, whether in groups or lectures. Secondly, to clarify, I understand that the Minister is saying that the course offers value for money, but an exercise must have been carried out to come to the costing of £7,500. If he does not have that information, I would be grateful if he could write to me with it. It is quite significant in terms of ensuring that we are delivering value for money for the taxpayer, as well as value for the small businesses that need the support.

[Paul Scully]

Indeed, and if there is anything that I do not cover today, I am happy to follow up on it. As I say, we have worked with business schools across the country; 33 are accredited at the moment and another 33 are seeking accreditation. By the end of that, we will have quite an extensive list—well beyond the existing cohort—that will be able to provide coverage across the country.

[Seema Malhotra]

I am grateful for the Minister’s generosity in giving way. A number of business schools contacted me because they were not clear about this. Is the expectation that other business schools may be able to participate in the programme if they feel that they have either the resources or the opportunity to do so? That might be in parts of the country where there do not seem to be as many courses advertised at the moment, because I have been looking at the regional advertising of what is available. Will it be the case that other business schools could participate, but they would have to become accredited to do so?

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[Paul Scully]

I can give the hon. Lady an absolute yes. We are encouraging more business schools to apply to the Chartered Association of Business Schools for accreditation to the SBC, and CABS will seek to complete that accreditation process within two months. As soon as schools gain accreditation, they will be able to deliver the programme. We want to ensure that there is a clear framework. I know that there are plenty of excellent business schools up and down the country, but we want to ensure that we can work within that framework to achieve the value for money that the hon. Lady rightly asks about, and to ensure that we have a consistent approach across the country.

The best description that I have heard of levelling up is that potential is equally distributed across the country, but opportunity is not, so we need to try to tackle that. Similarly, on business advice, we said in our manifesto, which we are trying to deliver, that the UK should be the best place to start, grow and scale a business, but we want to go further. I have seen this myself with my own business, and certainly in the last year working up and down the country. I want to ensure that we have a degree of consistency so that no matter where someone is in the UK, that should be the best place to start, grow and scale a business. That involves access to finance, mentoring, peer-to-peer networking and infrastructure, and this programme plays a major role within that.

The hon. Lady raised a really good point about not only geographical differences, but differences among the people whom the approach might benefit. We are working through our communications plan to ensure that we can get this out. We are converting registrations of interest into actual places and, similarly, making more registrations of interest available. What I am more interested in is the kind of businesses that we can speak to. Exactly as she said, it is female entrepreneurs, ethnic minority-led businesses and young people, whom I speak about and listen to on a regular basis.

The themes tend to be the same regarding what the barriers are for those businesses, but the answers are very different. With a tailored programme of work such as this, we can start to tackle that. However, we need to make sure that we do not go solely through the same people—the CBIs and the Institutes of Directors. Someone with an informal network will not necessarily be aware of those institutions or feel that they can engage clearly with them. What more can we do? I am always keen to hear more about how to reach those groups.

When we were handing out the first grants for retail, hospitality and leisure small businesses in the early stages of the pandemic—it was seemingly one of the easiest areas of support, because we knew exactly who qualified—we were still struggling with the relationship between the local authority and those businesses, because we did not have bank account details. Why? The businesses did not have a close transactional relationship with their local authority, so we had to do quite a lot of outreach through accountants, intermediaries and the local media in order to access the people who were running businesses based, as I say, on their informal networks. I am really keen to see what more we can do to drill down, because they are the people for whom this scheme will have the biggest effect.

The hon. Lady rightly talks about how we measure this. Frankly, there is little point in our subsidising someone who would pay the full £10,000 to go on a course over someone who perhaps could not afford it, would not be aware of it or would not think it was for them, although it actually would be very much for them. We ask for £750 because, frankly, if someone has a stake a scheme, they tend to get more out of it in the first place. I am really keen that we do more about finding those hard-to-reach people, and we will direct the funding more at places where productivity is lowest geographically. That is really important in the work that we are doing.

[Seema Malhotra]

I am grateful to the Minister for explaining that that is indeed a priority for the Government. It is important for the House to be kept updated, because we want this to be successful. If places are not being reached, it will show in the numbers of those registering interest and the regions in which people are registering interest. I hope the Minister will keep the House updated on the numbers, including by region.

May I probe the Minister on one point? He rightly talked about consistency, and I have a great deal of sympathy with the idea that we want to make sure that the programme has the same quality, standard and consistency across the country, but will he respond to my point about whether a proportion of the curriculum could be more tailored? For example, it is English Tourism Week. We know that the tourism sector has been very hard hit—

[Seema Malhotra]

I would be grateful if the Minister could consider whether that could be part of the way in which the programme is refined.

[Paul Scully]

The programme is sector-agnostic, but the peer networking within it means that there can be a certain degree of tailoring towards a particular business leader’s business or sector. Clearly, the alumni aspect, as it develops and expands, will be really productive. I know from courses that I have done in the past—in politics and in the business world—that such learning is often the most beneficial to business leaders.

The hon. Lady asked about charities. Unfortunately, the programme is not available to charities. It is a business-led programme, based on business productivity, but social enterprises clearly are well within the remit, so we want to make sure that we can deliver on that.

[Seema Malhotra]

I also asked why the programme is not available to charities, which I do not think the Minister has fully answered. If that is the case, what is the alternative? Leadership, management and innovation capability within the charity sector is also extremely important as such organisations play an enormous role in our local economies and are great employers.

[Paul Scully]

Charities are indeed great employers. Many of them do fantastic work, and there are always interesting things that we can do to support charities. This scheme answers a particular question. It is an outcome-driven thing: how do we increase productivity? It is especially aimed at businesses and social enterprises that have that sort of outlook, and that is the outcome that we are after. The hon. Lady asked how we will measure that, which is a really important point. On all of the productivity measurements that we already do, we want to make sure that we can see a company’s turnover and the prospects improving. The measurements that we want to make will be covered.

We need to drill down further into how we measure overall outcome, and therefore how we report it. The hon. Lady will undoubtedly ask questions, and rightly so. The easiest thing in the world would be to just give this to a young hotshot whose business is expanding anyway. We want to make sure that we can find the hard-to-reach people and increase their productivity, because that will be of use to the levelling-up agenda, and productivity will help the prosperity of communities as well as businesses. Businesses can be a force for good for not just UK plc, but communities, cities and towns.

The hon. Lady asked about the curriculum. As I have said, the curriculum has been run through business support specialists, including existing courses such as the Goldman Sachs 10,000 and formal learning at business schools, as well as other organisations that run their own schemes. We want to make sure that we learn from the best and get the best in. That means not only doing these informal comms, but working through banks, accountants and intermediaries. Every business has an accounts package such as Sage, Intuit and Xero. Small businesses know that they can work through these areas, and I am keen to make sure that we work with them to get to the harder-to-reach businesses, because we continue to be a champion of the needs of business and industry. That is why we have published “Build Back Better: our plan for growth”.

The supporting strategies will put the UK at the forefront of opportunities and give businesses the confidence to invest, boosting productivity across the UK and enabling our green industrial revolution, which is so important. “Build Back Better” can mean a wide number of things to a wide number of people. Building back better will not only increase productivity, but will build back fairer so that people working in such organisations can feel that they have productive jobs and careers.

[Seema Malhotra]

The Minister is right about building back better, fairer and greener. We need to make sure that businesses are supported in the growth sectors that might be coming, particularly around the decarbonisation of our economy. I hope that there will be a connection, when future growth is planned within the industrial strategy, to help to support businesses to take advantage of some of those opportunities, too.

I am aware of the Goldman Sachs programme. Indeed, that has seen considerable success. There will be other initiatives that are important to learn from regarding how grassroots businesses have been supported to grow. Have the Government learned from other programmes in the development of the scheme and its curriculum?

[Paul Scully]

I used that as an example, but we have been working with business schools and the schemes that I have dealt with over the last year. In my 14 months as a Minister, I have spoken to about 5,000 or 6,000 businesses. A lot of those have gone through various schemes such Goldman Sachs’s, and also Be the Business, which is a Government-sponsored organisation doing fantastic work up and down the country. We will continue to work and learn from them, but we do not want to replace what is already there. We want something that is additional, that adds value and a degree of consistency, and that allows Britain to be proud, and to be the best place to start to grow and scale up a business that will attract investment, increase productivity for the UK and help us to build back better. I commend the motion to the Committee.

Question put and agreed to.

Resolved,

That the Committee has considered the motion, That this House authorises the Secretary of State to undertake to pay, and to pay by way of financial assistance under section 8 of the Industrial Development Act 1982, compensation to Business Schools in respect of a proportion of the indirect costs of funding the Help to Grow Management Programme up to a limit of £220 million over three years.