Business Link in the West Midlands remains in the dark about its budget in the run-up to 2012 when it will be scrapped and replaced by a centralised call centre and website.
The future of the Advantage West Midlands-funded service, which employs 207 staff in the region, had been in doubt for some time as its contract was due to run out in March 2012.
But the Government confirmed in a White Paper it is to be scrapped as the coalition shifts its focus away from a generalist business support service and towards companies where it believes publicly-funded advice can add value.
Business Link West Midlands’ budget last year was £37 million, but cuts to Advantage West Midlands’ funding meant it had £28 million this year, forcing it to cut 47 jobs and pull out of grant subsidies.
Its budget for the 2011/12 period in the final year of its life is still unclear.
Business Link West Midlands chief executive Lorraine Holmes said: “Business Link West Midlands is currently contracted to deliver business support until March 2012 and, although the White Paper proposed a new direction for future business support, we are awaiting clarity regarding the timescales for any successor arrangements.
“As such, our core service to provide telephone and face-to-face advice to businesses and people who want to start a new business remains unaffected at the present time.
“We await further information about our Budget for 2011–12, and we anticipate a reduction in this will result in us having to downsize the business further.
“However, in the meantime we are committed to maintaining our vital services to clients as usual.”
Confirmation of the Government’s plans for the end of Business Link West Midlands came as part of a wide-ranging series of announcements last month on supporting regional growth.
The White Paper said: “At £154 million per annum, the costs of this support have been high and the generalist nature of these regional services means the support has often been poorly targeted, for example, towards so-called ‘lifestyle’ businesses that have no aspiration to grow.
“There are more efficient, effective and targeted ways to use public money to provide the kinds of business improvement help that businesses need.
“In future, greater prioritisation of Government support is required, focusing only on those areas where it can really add value.
“Businesses need to know how they will benefit from seeking external advice, especially strategic advice that has the potential to radically transform a business.”
The abolition of Business Link’s face-to-face business further erodes regional-level support for start-ups and small businesses in the West Midlands.
Last week the Post reported that the Arrow Fund, a not-for-profit lender supported by Advantage West Midlands, Birmingham City Council and Lloyds TSB, was shutting up shop due to the squeeze on public finances.
The Arrow Fund acted as a loan guarantee scheme to fill a gap in the lending market, offering loans of between £1,000 to £10,000 to help people go self-employed or expand their small businesses.
On the news of its demise, local business support organisations raised concerns that fledgling companies would face even more difficulties in getting their businesses off the ground.