Comment: Brian Williamson
Time for agencies to focus on the winners
After five years of austerity in the UK, and the prospect of five more regardless of how the electoral cards fall in May, one lesson stands out: where money is spent, it must be spent to the best possible advantage.
Government spending is still eye-wateringly large, but serious attempts have been made to ensure that the resources allocated by ministerial departments are not only value for money but also drive outcomes which are nationally beneficial.
It is a fiscally sensible approach, and one which should be analysed and acted on by governmental and enterprise agencies which are tasked with intervention in the commercial life of the nation.
Intervention, of course, has to be seen to be even-handed, with a level playing field for those businesses which seek assistance. But it has to be asked: is this broad brush strategy the most effective way to actually nurture and grow businesses?
In an era of ever-tightening limits on the resources available, there is a strong argument for more focus on identification of, and financial encouragement for, those enterprises which are more likely to succeed and create long-term, sustainable prosperity.
An example of how intervention can provide targeted, practical, focused assistance for innovative companies is the Elevator Centre for Entrepreneurship in Aberdeen, set up at the end of last year by the body which runs Business Gateway in the North East of Scotland and Tayside.
It is the brainchild of Professor of Entrepreneurship Gary McEwan, who came back to Scotland last year after in-depth experience at world centres such as the Massachusetts Institute of Technology (MIT), Boston’s Babson College of Entrepreneurship and Activa in Barcelona.
Elevator is intended to be a beacon of entrepreneurship for the region, a place rich in knowledge, steeped in innovation and alive with ambition, where entrepreneurs can meet, learn, discuss and collaborate. Its model could be rolled out across Scotland.
The Centre recognises that building a business that is innovation driven, grows to employ people and becomes an important asset to the economy is not easy. The demands of growth require a different skill set from the entrepreneur.
To assist this process, it accepts that it has to target resources on the enterprises that have the potential to become businesses of significance and its accelerator programme is aimed directly at innovators that have global potential.
This is simple common sense, and it is an approach which should be given serious consideration by the hundreds of interventionist organisations in the UK dedicated to assisting entrepreneurial people achieve their ambitions.
National government, too, could bend its mind to whether the current across-the-board approach to economic support schemes such as research and development tax relief is the best way to achieve the desired outcomes.
At the moment relief stands at 130% for SMEs. But does this incentive fairly reflect the different levels of effort and enterprise displayed by different applicants to the schemes?
Take, as a theoretical instance, an entrepreneurial UK company which manages to create and make commercially viable a means of carbon capture, the current Holy Grail of efforts to combat climate change.
Such an enterprise would have the capacity not only to allow the UK to meet its binding carbon reduction obligations, it would have the potential to be a world-beating exports success, reaping economic rewards far into the future.
Would such a potentially global company not be deserving, in its development stages, of reliefs of, say, up to 200%? The costs of such support could be offset by reducing to, say, 50% the reliefs for companies which, while creating worthwhile changes, are not as relevant to national economic success.
Seeking out the best economic destinations for interventionist resources would be a formidable challenge. It would mean agencies making judgemental decisions and backing the candidates whom they considered would give them the most bang for their buck.
But as the fiscal belt continues to tighten, these are decisions which may soon have to be made.
Brian Williamson is managing director at R&D tax credit specialist Jumpstart.