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27 November 2018

UK Shared Prosperity Fund an opportunity to rebalance growth

Future business support funding after Brexit should help to rebalance growth across the UK, targeting more deprived areas across the country, where firms have significantly lower turnover. 

Sharing Prosperity, a new report from the Federation of Small Businesses (FSB) and the Enterprise Research Centre (ERC), says it is critical that funding levels are not cut when the new UK Shared Prosperity Fund (UKSPF) comes into effect.

The report has been released a year on from the launch of the Government’s Industrial Strategy, which aimed to rebalance economic growth across the UK.

The creation of UKSPF will give the Government greater flexibility when distributing business support funds across the UK and devolved nations. The report calls for small businesses to be front and centre of the new fund, with a specific focus on small firms in more deprived parts of the country, described in the report as ‘less favoured areas’ (LFAs).

With small firms in LFAs reporting significantly lower turnover growth than those based elsewhere (0.7% in LFAs, compared to 3.2%), it’s clear that access to support needs to be refocused to reach these areas. This support must move beyond job creation, and include a focus on things like productivity, social impact on communities, modernising business practice and decarbonisation targets.

The research shows firms in these areas are not short of ambition, with half of small business owners striving to become a business leader in their community (49.5%) – significantly more compared to those in other areas (43.5%).

It’s vital that the current overall funding levels are not cut, with control of devolved spend maintained by the devolved nations. The report also recommends the creation of a new Business England brand for business support in England to encourage more engagement and give a consistent picture across the country, particularly focussing on key areas like access to finance.  

Key to distributing the support funding fairly will be allowing each Local Enterprise Partnership (LEP) to distribute their proportion of UKSPF funding, earmarked for LFAs– with input from a new ‘small business champion’ who will sit on each LEP board.  

The report calls for all LEPs to create their own strategy to identify areas in need of more funding, and plan tailored support for them.

Mike Cherry, FSB National Chairman, said: “As the UK leaves the EU, a large amount of business support funding will be transferred to UK control. This gives us a great opportunity to reflect on the current support landscape and rebalance the system, looking at how funds are best spent to benefit small firms across the UK.

“To do this properly, policymakers must realise the potential and ambition of business owners in these ‘less favoured areas’ across the UK. The ambition is there – our research shows that business owners in more deprived areas want to become business leaders in their communities.

“Providing the right support will allow them to ramp up productivity, create jobs and see their business community grow.

“We’ve set out a number of recommendations to help rebalance the economy. The amount of funding is critical to at least maintain, or increase, current support levels.”